Dark Matter Technologies has enhanced the Loan Assumptions feature in the Empower loan origination system (LOS) to make it easier for mortgage lenders and servicers to transfer assumable mortgages to new homebuyers.
The Empower LOS is the first mortgage loan origination system to announce native support for loan assumptions, a feat made possible by the system’s flexibility and robust mortgage servicing platform integrations, the company says in a release.
An assumable mortgage is a type of home loan that allows the transfer of the original borrower’s loan – including the remaining balance, repayment schedule and interest rate – to a new homeowner. Although conventional loans are seldom assumable, loans from the Federal Housing Authority (FHA), Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) – products that account for more than one in five active loans today – can be assumed if certain conditions are met.
Typically, buyers must qualify under the loan’s criteria, and sellers need to obtain approval from their loan servicer. The Empower LOS supports the process whether initiated by the seller’s mortgage servicer or the buyer’s mortgage originator and can even work with financial institutions that use a different LOS provider for first-lien origination.
Mortgage assumptions are gaining popularity in today’s purchase mortgage market, where buyers often face interest rates that are higher than the seller’s existing rate, the firm says.
The FHA recently announced it will adjust the maximum fee mortgagees may charge to process these loans from $900 to $1,800. Scheduled to go into effect on August 19, the change was made to support increased consumer demand by compensating mortgagees “at a rate that is appropriate for today’s market.”
“After successfully piloting our loan assumption capability with a select group of early adopters, we’re incredibly pleased with the progress, success and the general availability of this important feature that consumers and real estate agents are increasingly asking for by name,” says Rich Gagliano, CEO for Dark Matter. “By partnering with Dark Matter, mortgage originators and servicers can transfer assumable mortgages for home buyers and sellers in a manner that is compliant and efficient.”
Photo: Mathew Schwartz