What is the process of transferring the mortgage obligations to another party called?

The process of transferring mortgage obligations to another party is referred to as assumption. In this context, assumption allows a new borrower to take over the existing mortgage responsibilities, including making payments and adhering to the loan terms. This can be beneficial for the new borrower if the existing mortgage has favorable terms compared to current market rates.

Assumption typically requires approval from the lender, who will assess the new borrower's financial qualifications to ensure they are capable of fulfilling the mortgage obligations. This transfer can relieve the original borrower from their loan responsibilities, subject to any conditions set by the lender.

In contrast, subrogation refers to the legal right for one party to pursue a claim or recover damages on behalf of another. Default signifies a failure to meet the contractual obligations, particularly in the context of failing to make mortgage payments. Cancellation implies the termination of a mortgage agreement altogether, which is a different process than transferring obligations.