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.

  1. Delinquent Mortgage

  2. Mortgage Forbearance Agreement

  3. Loan Modification

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

  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

  2. Personal Finance

    Understanding Your Mortgage

  3. Budgeting

    Mortgages: How Much Can You Afford?

  4. Options & Futures

    Make A Risk-Based Mortgage Decision

  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?

  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.
  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

  2. Discouraged Worker

  3. Ponzimonium

  4. Quarterly Earnings Report

  5. Dark Pool Liquidity

Trading Center