Workgroup hears bill to make conventional mortgages assumable as tool to widen homebuying options

Senator Glenn Sturtevant introduced legislation to create a pilot allowing assumability for certain conventional mortgages, saying the change would give buyers an alternative route into homeownership without overturning existing loan contracts.

The bill would make some private, conforming mortgages assumable prospectively so that a buyer could take over an existing mortgage at its original rate if they meet the lender—s underwriting standards. "My plan for this session is to make it a pilot program, for probably 5 years, and to try to narrow it down to just what I understand are sort of the most common mortgages, which are called conforming mortgages," Sturtevant said. He emphasized the proposal would be prospective, not retroactive, and would not eliminate lenders— existing underwriting or foreclosure remedies.

Proponents said the proposal addresses affordability by expanding practical access to lower monthly payments. Ronak Singh, founder and CEO of ROADM, said his company helps buyers assume FHA and VA loans and that expanding assumability would yield substantial savings. "Had we extended the opportunity to all loans, Americans everywhere would have saved in our estimates around $480,000,000,000 of unnecessary interest rate payments last year," Singh told the workgroup, and he estimated that up to 400,000 Virginians could become homeowners through wider access to assumable loans. Singh framed the proposal as a temporary, pragmatic response to current high interest rates and noted existing servicer safeguards and underwriting requirements.

Industry witnesses urged caution about broad, immediate changes. Andrew Price, representing the Richmond Mortgage Bankers Association, told the workgroup that Fannie Mae and Freddie Mac account for roughly 62264% of the mortgage market and generally do not allow assumptions. "If we were to make a law that allows for that, it's gonna go up against what Fannie and Freddie ... have as their base practice," Price said, adding that loans already sold into secondary markets have been priced and valued with their terms in mind. Price and others raised three recurring concerns: (1) the need to preserve lender underwriting and remedies; (2) the potential difficulty for buyers to finance the difference between the sale price and the outstanding loan (often requiring a down payment or second mortgage); and (3) seller liability unless the seller is formally released from the loan.

Workgroup members pressed for narrower language and federal-law compliance. Several members and presenters noted that existing federal frameworks (for FHA and VA loans) already permit assumption, and that any Virginia law should avoid impairing existing contracts or creating conflict with federal secondary-market practices. Delegates on the panel suggested limiting a state law to (a) prospective mortgages, (b) specific loan types (conforming conventional loans), or (c) carve-outs tied to federal statutory exceptions to due-on-sale enforcement such as transfers by death or divorce. Sturtevant and witnesses discussed a state preemption approach that would permit lenders to waive due-on-sale rights under an express state statutory framework.

Next steps: Sturtevant said he would work with staff and interested members to produce a streamlined draft reflecting the technical feedback; several members volunteered to review a narrower proposal before the next meeting. No formal vote or committee action occurred during the meeting.