Is it legal to use a quitclaim deed to transfer sole ownership of a home that still has a USDA mortgage? The new owner is not on the mortgage but intends to take over the payments. This is in Massachusetts.

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I mean it's probably not illegal in the sense you'd have criminal prosecution.

Whether it's a breach of the mortgage would require reading the provision on transferability and assignment. Most mortgages aren't assignable.

Also, this is a terrible idea regardless of the ability to assign the mortgage....

Risk for the old owner too. Even if they assign the mortgage they wouldn't be released from the mortgage. If new owner stopped paying they'd be on the hook for the missed payments.

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It’s not illegal but it’s a violation of most mortgage docs. People do it all the time though, usually to quit claim ownership to an LLC or trust they set up. Usually lenders don’t catch it but if they do they can force the change back or make you pay off the loan, or else it’s in default.

I would never forfeit ownership of a property if I was still on the loan though. Even to family. Someone dies and there’s a big mess. Get it all in writing if you’re going to do that.

Legal questions like this should be answered by a real estate attorney in that state. USDA loans are assumable, but the buyer must qualify for the loan, they cannot just "take over payments." Most conventional mortgages and HELOC have a "due on sale" clause and are NOT transferrable as you describe. That means seller could be required to pay mortgage amount IN FULL on a house they do not own anymore. Finally, with a quitclaim deed, there is the issue that you have not assured buyer that seller has clear title to the property - for example heirs, other owners, tax liens, etc.

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