Alabama Real Estate Practice Exam

What happens in an assumption of a mortgage?

1. The original lender assumes responsibility

2. Someone else assumes the loan with no liability from the original owner

3. The property is reassessed for tax purposes

4. Mortgage value decreases

The correct answer is: Someone else assumes the loan with no liability from the original owner

In an assumption of a mortgage, the property owner transfers the responsibility of the mortgage to another person. Option A is incorrect because the original lender does not assume responsibility, instead it is transferred to a new person. Option C is not relevant to an assumption of a mortgage, as it does not affect the ownership or responsibility of the loan. Option D is incorrect because the value of the mortgage does not change in an assumption, it is simply transferred to a new borrower. Therefore, the correct answer is B, where someone else assumes the loan with no liability from the original owner. This can occur when selling a property with an existing mortgage, in which the new buyer takes over the payments and becomes responsible for the loan.