What is the term for a provision in a mortgage that permits the transfer of the mortgage from one party to another?

The term for a provision in a mortgage that allows for the transfer of the mortgage from one party to another is known as the Assumability Clause. This clause is essential because it defines the conditions under which a borrower can transfer their mortgage obligations to another individual, typically when selling the mortgaged property.

When an assumability clause is in place, it can facilitate the selling process of a home, as it allows the buyer to take over the existing mortgage instead of needing to secure a new one. This can be beneficial if the current mortgage has favorable terms, such as a lower interest rate compared to current market rates.

The other options do not accurately represent this specific provision. A transfer clause generally relates to transferring ownership but is not the term specifically used for the mortgage assumption context. A mortgage transfer agreement isn't a widely recognized term in mortgage law as it pertains to transferring the mortgage's terms or obligations directly. Lastly, a substitution clause typically refers to replacing one party in a contract, but it does not specifically address the transfer of mortgage terms or obligations.