When starting my real estate career in back in the 80’s, it was not uncommon for buyers to assume or take over existing financing. Just about every sale involved a wraparound financing and It was a perfect solution to sell a home in a rough market. There were no loan origination fees or points, and buyers were often willing to pay a little higher for a home that had an assumable loan.

 In todays market we are seeing large amount of foreclosed homes and banks negotiating short sales. There are still plenty of people who want to buy a home, but are finding that loans are harder to get because banks are being extremely conservative. Home prices and the required down payments are higher and putting home ownership out of the reach of many people. It is becoming a lose- lose situation for the banks, the sellers and the buyers.

So why don’t banks make loans assumable.  If banks were to make all distressed loans assumable they would provide an immediately available financing alternative for the real estate market. The sellers would have the opportunity to walk away from their homes without loosing them, the banks would not be swamped in foreclosures, and buyers would be able to purchase a home.