Mortgage Loan Assumption in Divorce

Mortgage Loan Assumption in Divorce

One of the most significant assets that couples may have is their home, and with it comes the mortgage loan. When going through a divorce, one of the options for handling the mortgage is through a loan assumption. In a recent recording, San Diego Family Law Attorney Scott Levin discussed this issue with Tami  Wollensak, an expert Certified Divorce Lending Professional (CDLP®), to help unlock the mysteries of mortgage loan assumption,  how it works during a divorce, and the steps involved in the process.

What is Mortgage Loan Assumption?

Mortgage loan assumption is the process of transferring the responsibility of a mortgage loan from one party to another. This means that the new party will take over the mortgage payments and become the new borrower on the loan. This can be done for various reasons, such as a change in financial circumstances or a divorce.

How Does Mortgage Loan Assumption Work During Divorce?

During a divorce, the couple must decide what to do with their shared assets, including their home and mortgage loan. One option is for one party to assume the mortgage loan and become the sole borrower. This means that the other party will be released from any financial responsibility for the mortgage. There are other ways to handle division of homeownership during divorce which you should read about and understand as well.

The process of mortgage loan assumption during divorce involves the following steps:

  1. Agree on the terms: The first step is for both parties to agree on the terms of the mortgage loan assumption. This includes the new borrower’s name, the terms of the loan, and any other details that need to be addressed.
  2. Contact the lender: Once the terms have been agreed upon, the new borrower must contact the lender to inform them of the change in ownership. The lender will then review the new borrower’s financial information and credit history to determine if they are eligible to assume the loan.
  3. Submit an application: The new borrower will need to submit an application to the lender, which includes their personal information, income, and assets. They may also need to provide documentation, such as pay stubs and bank statements, to support their application.
  4. Approval and closing: If the lender approves the application, the new borrower will need to sign the necessary paperwork to assume the loan officially. This may involve closing costs and fees, similar to when the original loan was taken out.
  5. Release of liability: Once the loan assumption is complete, the original borrower will be released from any financial responsibility for the mortgage. This means that they will no longer be liable for any missed payments or default on the loan.

Alternatives to Mortgage Loan Assumption

If mortgage loan assumption is not the right option for you and your spouse, there are alternatives that you can consider:

  • Refinancing: Refinancing involves taking out a new loan to pay off the existing mortgage. This can be a good option if you want to remove your spouse’s name from the mortgage or if you want to take advantage of lower interest rates.
  • Selling the home: If neither party wants to keep the home, selling it and splitting the proceeds may be the best option. This can also help avoid any future conflicts or financial burdens.

As a Mortgage Loan Originator, Tami’s goal is to educate her clients, take the mystery and anxiety out of the mortgage process, and provide a sense of security and peace to each of them. Tami can lend in all 50 states. (NMLS #1963450). Schedule a call to learn more at or email her at

Super Lawyer Scott Levin is a top rated family law attorneys in San Diego, CA and founder of San Diego Divorce Mediation & Family Law. As a boutique family law firm providing divorce and family law services throughout California for a wide range of issues, including divorce, custody, financial and support issues, we empower couples to resolve their divorce collaboratively.  Reach out today to schedule a free consultation or call Scott at (858) 255-1321.