In what scenario would a due-on-sale clause render a mortgage non-assumable?

A due-on-sale clause is a provision in a mortgage contract that grants the lender the right to demand full repayment of the loan if the property is sold or transferred. This clause effectively makes the mortgage non-assumable in certain situations.

When there is a transfer of title without lender consent, the due-on-sale clause is triggered, allowing the lender to call the loan due. This is because the lender wants to ensure that they have approved the new borrower taking over the loan. Without the lender's consent, the new owner may not meet the lender's qualification criteria, which could increase the lender's risk. Therefore, if the title is transferred without the lender's knowledge or approval, the mortgage typically cannot be assumed by the new owner, making it non-assumable.

The other scenarios provided do not directly relate to the enforceability of the due-on-sale clause. For instance, poor credit of the seller or refusal to pay an assumption fee does not directly provoke the due-on-sale clause; instead, those would pertain to different aspects of the mortgage process. Likewise, while government-backed mortgages may have specific rules regarding assumptions, they can still have due-on-sale clauses, and this doesn’t inherently make them non-assumable in every case.