The California General Assembly is considering legislation that would require a conventional home mortgage loan on residential property with multiple borrowers to be assumable by an existing borrower.
The legislative counsel’s digest of AB 3100, states “The bill would, beginning Jan. 1, 2025, require a conventional home mortgage loan on residential real property containing less than five dwelling units with multiple borrowers to include provisions to allow for any of the existing borrowers to purchase the property interest of another borrower on the loan by assuming the seller’s portion of the mortgage under specified circumstances if the assuming borrower qualifies for the underling loan, as determined by the lender.”
It would add Section 2951 to the Civil Code to read, “On or after Jan. 1, 2025, a conventional home mortgage loan on residential real property containing less than five dwelling units with multiple borrowers shall include provisions to allow for any of the existing borrowers to purchase the property interest of another borrower on the loan by assuming the seller’s portion of the mortgage in connection with a decree of dissolution of marriage, a legal separation agreement, or an incidental property settlement if the assuming borrower qualifies for the underling loan, as determined by the lender.”
An explanation of the loan assumption process would be included in the loan documents provided to the borrowers.
The bill defines conventional home mortgage loan as “a mortgage loan that is not insured or guaranteed by the federal government.”