Workout Assumption

DEFINITION of 'Workout Assumption'

The assumption of an existing mortgage by a qualified, third-party borrower from a financially distressed borrower. By having someone else assume the mortgage, the financially distressed borrower is relieved of its obligation of repaying the mortgage. The assumption must be approved by the mortgagee.

BREAKING DOWN 'Workout Assumption'

Foreclosure on a mortgage that is in default is an expensive and timely solution for the lender. If a borrower's financial problems are temporary, a lender might be willing to find a temporary solution, such as a forbearance agreement. If a borrower's financial problems are lasting, a workout assumption is one of several remedies that can help the borrower avoid foreclosure. Other remedies include a mortgage short sale or a deed in lieu of foreclosure.

RELATED TERMS
  1. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  2. Mortgage Forbearance Agreement

    An agreement made between a mortgage lender and delinquent borrower ...
  3. Loan Modification

    A modification to an existing loan made by a lender in response ...
  4. Deed In Lieu Of Foreclosure

    A potential option taken by a mortgagor (a borrower) to avoid ...
  5. Backlog

    A build-up of work that needs to be taken care of. The term "backlog" ...
  6. Zombie Foreclosure

    A situation (or a home in this situation) that occurs when a ...
Related Articles
  1. Economics

    How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  2. Personal Finance

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.
  3. Budgeting

    Mortgages: How Much Can You Afford?

    Answering this means number-crunching as well as factoring in other considerations and expenses.
  4. Options & Futures

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  5. Options & Futures

    Battling Foreclosure: The HOPE NOW Alliance Strategy

    Hope Now was formed to help prevent foreclosures. Are the organization's strengths enough to overpower its weaknesses?
  6. Home & Auto

    Option ARMs: American Dream Or Mortgage Nightmare?

    Option adjustable rate mortgages could make or break your home-buying experience.
  7. Real Estate

    Performance Review: Real Estate in 2015

    Find out why there are signs of another housing bubble after a great year for real estate investors in 2015, and see some forecasts for real estate in 2016.
  8. Investing Basics

    What is a Heatmap?

    A heatmap is a graphic that uses colors to show data patterns and activity levels.
  9. Home & Auto

    How to Work With Your Lender if You Can't Pay Your Mortgage

    Homeownership is a dream but when you can't pay your mortgage it becomes a nightmare. In the wake of the housing meltdown lenders are more willing to help.
  10. Retirement

    How Does A Reverse Mortgage Work?

    The basics of getting a reverse mortgage, with detailed information on how to qualify and what to watch out for.
RELATED FAQS
  1. How did the Great Recession affect structural unemployment?

    The Great Recession greatly increased structural unemployment levels by creating a large disparity between the high supply ... Read Full Answer >>
  2. How does lower borrowing costs affect new airlines in the aerospace industry?

    Lower borrowing costs can help a new airline afford to obtain aircraft as well as pay for operating expenses such as salaries ... Read Full Answer >>
  3. What is a Z bond in a collateralized mortgage obligation (CMO)?

    A Z-bond is the lowest tranche in a collateralized mortgage obligation (CMO). Z-bonds, also called accrual or accretion bonds, ... Read Full Answer >>
  4. How does securitization increase liquidity?

    Securitization involves taking an illiquid asset (or group of assets) and consolidating with other assets in an effort to ... Read Full Answer >>
  5. Are all mortgage backed securities (MBS) also collateralized debt obligations (CDO)?

    Mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) are different concepts with frequent overlap ... Read Full Answer >>
  6. How can investors use trends in the unemployment rate to evaluate the outlook of ...

    Credit services companies provide financial services in the form of credit and loans to individuals and businesses; these ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center