Fannie Mae and Freddie Mac are studying new ways for homebuyers to take over existing mortgages or move loans between properties, according to Federal Housing Finance Agency Director Bill Pulte.
"Fannie, Freddie eyeing assumable or portable loans," Pulte said in a post on X.
The two government-backed mortgage enterprises currently allow fixed-rate loan transfers only in limited cases, such as death or divorce.
Mortgage Professional America reported that if broader transfers are approved, the change could help more homes sell in a market where many owners have lower-than-market rates.
It could also create new risks and reduce profits for lenders.
An assumable loan lets a buyer take over the seller's mortgage. In Canada, borrowers can "port" their loan to a new home instead.
That is a key distinction.
"Assumability stays with the house. Portability stays with you," said Emmanuel Santa-Donato, senior vice president and chief market analyst at Tomo Mortgage.
He said Canada's model works partly because that country enforces strict prepayment penalties, while the U.S. allows borrowers to refinance into lower rates without such limits.
Many lenders may hesitate to expand assumable loans because they would retain older, lower-rate mortgages instead of originating new ones.
Sellers may also want compensation for giving up the benefit of a cheaper mortgage.
In strong markets, assumable mortgages might not make homes more affordable for buyers.
"I do think this thread can get lost in the conversation around assumable mortgages," Santa-Donato said.
Supporters say the change could still improve affordability for many buyers.
About 70% of current borrowers have mortgage rates below 5%.
Allowing $9 trillion in existing loans averaging 3% to transfer could save a typical buyer about $700 a month, or more than $200,000 over the life of a mortgage, said Raunaq Singh, CEO of Roam, a brokerage that focuses on assumable loans.
Servicers could also benefit.
"They can collect 25 basis points per payment and retain their servicing rights instead of having them paid off," Singh said.
Lenders might issue a second mortgage to cover the gap between the existing loan and a higher sale price.
Borrowers would still need to meet underwriting standards, said Kara Snow, senior regulatory counsel at Covius.
If housing prices continue to soften and Pulte's plan advances, assumable or portable mortgages could become a new option for U.S. homeowners and buyers.
There are no solid indications of when or if the portability option may broadly develop for U.S. homebuyers.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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