A new bill that would enable homeowners to transfer their existing mortgage to a new home has been introduced in Congress.
Rep. Tom Kean Jr. (R-NJ) has put forth the Making Ownership Viable for Everyone (MOVE) Act, which would allow homeowners to transfer their existing mortgage rate, term, and balance to a new property. The MOVE Act would also require Fannie Mae and Freddie Mac to begin purchasing portable mortgages.
The subject of portable mortgages was briefly raised last fall by Federal Housing Finance Agency Director Bill Pulte as a potential tool for the Trump administration to combat affordable homeownership challenges. However, the administration never went forward with the idea.
“Homeownership is one of the most important ways New Jersey families build equity, stability, and long-term financial security,” said Kean. “I have heard directly from residents across our state who feel stuck in homes that no longer meet their needs because moving would mean giving up their mortgage rate. I wrote this bill, the MOVE Act, to give homeowners more freedom, help put more homes on the market, and make the American Dream of owning a home more attainable for families across New Jersey.”
This is the second bill introduced by Kean since return to Congress after an unexplained absence from March 5 to June 30. Upon his return, he stated he was away from Washington to receive treatment for depression.
I have no idea how this could work. Let’s say I have a $300k outstanding balance on a property I’m selling that’s worth $500k. I sell that home for $500k, and now I want to buy a new home for $700k. From where does the $700k that the new home’s seller requires to transfer the deed to me come? True, I have $500k from the sale of my property to give him or her, but that doesn’t cover the $700k sales price. So if I give that $500k to the seller, will my old mortgage that’s transfered now be $500k ($300k original balance still owed + $200k new money)? And what if I can’t afford the payment on a $500k mortgage balance because the payment would absolutely have to increase to cover the added debt in order for the loan to amortize? I have no idea how this could work. Assumptions (that already exist for certain types of loans) allow a buyer to assume the seller’s mortgage as is (as long as he or she qualifies) by paying the seller the difference between the mortgage balance assumed and the property’s value. But the buyer’s previous mortgage is paid off when the assumer (buyer) sells his or her previous home.
Wasn’t the main purpose behind the California Lottery to fund schools? What happened to all THAT money?
This is the best idea I have heard from a GOP legislator is decades. This will be a game changer in the housing/residential real estate market. I hope it passes. My guess is that it’s not going anywhere. The big banks and financial institutions will kill it. How dare you try to make life affordable for the ordinary citizens.
What happens when you want to take a $300,000 mortgage to a $750,000 house? Should the bank be forced to give you that 3% rate even though their exposure is now more than doubled? Republicans are practicing socialism and they don’t even know it.
How interesting!!!! Would this change the options for an older couple who wants to sell but has a lower than current interest rate they don’t want to use? My theory example: A portable mortgage might be used in a sale and purchase for a couple that can sell for $900,000, with a $280,000 mortgage balance at 5% interest, and the same couple wants to buy a $600,000 home elsewhere: Does this make sense?
A true portable mortgage would let the couple move the remaining $280,000 balance—not the original loan amount—from the current home to the $600,000 replacement home, preserving their 5% rate and remaining amortization term.
Mechanically, the lender would release its lien on the $900,000 home and replace it with a lien on the $600,000 home. The buyers would bring $320,000 of their sale proceeds to the purchase; the $280,000 carried loan supplies the rest of the purchase price.
Their new first-mortgage loan-to-value would be:
$280,000÷$600,000=46.67% LTV
$280,000÷$600,000=46.67% LTV
That is a very conservative collateral position. They would still retain approximately $300,000, before broker commissions, seller concessions, transfer taxes, payoff/settlement charges, and the buyer’s closing/pre-paids.
Underwriting view
Even under a future Fannie/Freddie portable-loan program, I would expect the lender to require:
A new appraisal supporting the $600,000 value and confirmation that the new home is acceptable collateral.
Re-underwriting of credit, verified income/assets, debt-to-income ratio, occupancy, insurance, title, and any state-specific property requirements.
A coordinated closing—often same-day or inside a short permitted window—so the lien can move from the sold home to the replacement home.
Payment of all transaction costs and any required reserves from the couple’s available cash.
Continued qualification based on the existing $280,000 loan payment, taxes, insurance, HOA dues if applicable, and their other debts.
Importantly, this is not an assumption. With an assumption, the buyer of the $900,000 home takes over the sellers’ mortgage. With portability, the same couple retains the $280,000 debt and changes the collateral from their old home to the new one.
Practical results
The couple would not need a new $600,000 mortgage—or even a new $280,000 mortgage—if portability were permitted. They would keep their 5% loan on the remaining $280,000 balance, use $320,000 of equity as their down payment, and have roughly $300,000 in gross proceeds remaining for closing costs, reserves, moving, investments, or other purposes.
1) The seller moves, two homes are sold and bought – money moves and the people move.
2) Seller retains more of their equity.
3) There are more dollars put into the economy with the seller’s resulting cash position.
Currently, under today’s standard conventional Fannie Mae/Freddie Mac framework, the actual transaction is instead:
sell for $900,000,
pay off the $280,000 loan at closing,
receive about $620,000 before costs,
then purchase the $600,000 home—potentially all cash,
leaving roughly $20,000 before costs, or with a smaller new mortgage if they prefer liquidity.
Fannie Mae’s current guidance also treats a pending sale and a new principal-residence purchase as separate underwriting matters, requiring evidence of the sale and cleared financing contingencies to exclude the old housing payment in qualifying.
I think the idea is interesting!!!
Heath Coker thx for your breakdown explanation. Recently had a senior relative wishing he could buy a home similarly priced as his current home & get same interest rate? Like many srs, he’s not selling/moving bcuz he doesn’t want to lose his 3% int rate.
No loan program is a perfect fit for everyone. Sounds good for downsizing, Not so good for upsizing.