A Florida real estate licensee is working with a buyer who wants to assume the seller's existing VA loan. The licensee discovers the loan has a due-on-sale clause. What should the licensee advise the buyer?
Correct Answer
B) The buyer must obtain written approval from the lender before proceeding
The buyer must obtain written approval from the lender before proceeding with the assumption when a due-on-sale clause exists. Option A is incorrect because VA loans with due-on-sale clauses still require lender approval for assumptions. Option C is incorrect because due-on-sale clauses are generally enforceable in Florida regardless of loan type. Option D is incorrect because veteran status alone doesn't override the need for lender approval when a due-on-sale clause exists.
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Related Topics & Key Terms
Key Terms:
Related Concepts
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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