Or. Admin. Code § 813-020-0054

Current through Register Vol. 63, No. 12, December 1, 2024

Section 813-020-0054 - [Effective until 5/2/2025] Change of Ownership; Assumptions by Substitution of Liability for a Program Loan

(1) A borrower under the Single-Family Mortgage program may transfer ownership of property financed by a program loan pursuant to an assumption if the Department determines prior to the transfer that the assumption results in a substitution of liability and the purchaser is eligible to be a borrower under OAR 813-020-0030. The assumption may be made subject to the terms of the existing loan without an interest rate increase. An assumption under this section is also subject to the following provisions:

(a) The application for the assumption must be processed according to the rules of this division, and applicable terms of the agreement between the loan servicer and the Department;

(b) The acquisition cost may not exceed the limit established by the Department and in effect at the time the assumption application is made if the original program loan was made from the proceeds of bonds sold after September 15, 1982;

(c) An applicant for an assumption may not have held a present ownership interest in a principal residence at any time within the three years immediately preceding the date of the assumption unless:

(A) The original program loan was made from the proceeds of bonds sold on or before September 15, 1982; or

(B) The residence is located within a targeted area as designated under OAR 813-020-0070; and

(d) The borrower must have an annualized gross household income that does not exceed certain limits established by the Department in accordance with the Internal Revenue Code of 1986, as amended.

(2) An assumption under this rule is not subject to a minimum down payment requirement if no secondary financing is involved in the transaction. If any part of a down payment is to be provided by secondary financing, the purchaser shall make at least a five percent down payment from liquid assets or cash equity, calculated on the current purchase price of the residence to which the assumption applies. Secondary financing under this section must amortize over a specified period and may not provide for a balloon payment.

(3) A loan servicer may collect fees on an assumption under this rule as follows:

(a) The servicer may collect a nonrefundable assumption application fee. The fee, including the credit report fee, may not exceed $150. If the assumption is denied, the loan servicer may retain the portion of the fee not applied to the costs of the credit report. If the assumption is approved, the loan servicer shall apply the portion not applied to the costs of the credit report as a credit to the processing fee allowed under subsection (b) of this section.

(b) The servicer may charge a fee for processing an assumption. The fee on a conventional loan may be one percent of the loan balance or $400, whichever is greater, but may not exceed the customary fees charged in the geographic area for assumptions on mortgage loans owned by private lenders. The processing fee on a loan insured by the Federal Housing Administration (FHA) may not exceed the usual and customary fees allowed. A fee charged under this subsection must be commensurate with the work on the loan by the servicer.

(4) A loan servicer for an assumption under this rule shall make any necessary disclosures, ensure that all insurance policies reflect the new ownership and take any action necessary to continue the benefits of the mortgage insurance or guaranty without interruption.

(5) An assumption transaction must retain the Department's original loan number.

Or. Admin. Code § 813-020-0054

1HD3-1981, f. & ef. 1-30-81; 1HD 11-1981, f. & ef. 10-5-81; 1HD 7-1982(Temp), f. & ef. 9-20-82; 1HD 9-1982, f. & ef. 11-10-82; 1HD 1-1984, f. & ef. 1-3-84; 1HD 9-1984, f. & ef. 9-4-84; 1HD 16-1984, f. 12-31-84, ef. 1-1-85; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 10-1989, f. & cert. ef. 11-3-89; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 8-1991, f. & cert. ef. 12-23-91; HSG 4-1995, f. & cert. ef. 9-28-95; OHCS 8-2011(Temp), f. & cert. ef. 9-30-11 thru 3-27-12, Renumbered from 813-020-0024; Renumbered from 813-020-0024 by OHCS 1-2012, f. & cert. ef. 3-27-12; OHCS 46-2024, temporary suspend filed 11/04/2024, effective 11/4/2024 through 5/2/2025

Statutory/Other Authority: ORS 456.555

Statutes/Other Implemented: ORS 456.620, 456.625, 456.635 & 456.640