Regulations of Connecticut State Agencies
(a) The standards for assumption of CHFA loans depend upon the type of mortgage insurance or guaranty used and the date upon which the loans were originally committed for purchase. These standards are as follows:
(1) loans committed prior to January 1, 1982:
(A) FHA-insured and VA-guaranteed loans may be assumed pursuant to applicable federal requirements, without the prior consent of CHFA. Servicers are responsible for ensuring compliance with such federal requirements. Following the assumption, the servicer shall furnish CHFA with copies of the recorded warranty deed and assumption agreement, as well as evidence of adequate hazard insurance coverage.
(B) PMI loans are assumable only with the prior written consent of CHFA. Both the property and the assuming buyer(s) must meet the standards for eligible borrowers/dwellings as are then in effect. In order to obtain CHFA's consent, the servicer shall forward a request for approval of assumption, on forms provided by CHFA, together with such underwriting documents as are set forth in the Home Mortgage Programs Operating Manual. Following the assumption, the servicer shall furnish CHFA with the original recorded assumption agreement, a copy of the warranty deed, an original Owner-Occupancy Certificate, executed by the assuming buyer(s), a PMI endorsement naming the assuming buyer(s), evidence of hazard insurance coverage, and the HUD Form 1 (RESPA).
(2) assumption of loans committed after January 1, 1982:
(A) The prior consent of CHFA is required for the assumption of all loans, regardless of the form of mortgage insurance or guaranty. Such consent may be granted only upon the property's and the assuming buyer's qualifying as an eligible dwelling and an eligible borrower, respectively, according to those standards in effect at the time. The servicer shall forward such documentation to CHFA as is required for approval of new loans.
(B) VA loans are assumable only if a copy of the Veteran's Consent Statement, as required by 36 CFR Sec. 36.4306 (a) & (e), is on file with CHFA. PMI loans require the assuming buyer(s) to obtain the PMI company's written approval of the assumption.
(C) Following the assumption, the servicer shall provide CHFA with such documentation as is required by the Home Mortgage Programs Operating Manual.
(b) The servicer may charge the assuming buyer a fee equal to one percent (1%) of the loan's outstanding principal balance at the time of the assumption, except for those loans which are assumable without CHFA's prior consent. In no event shall the fee charged exceed the maximum permitted by the mortgage insurer or guarantor.
(c) CHFA will not release any original borrower from liability following the assumption of a loan. Any provision to the contrary in an assumption agreement is void.
(Effective January 27, 1986)