A borrower signs a deed where the buyer agrees to assume the existing mortgage debt. After purchase, the buyer defaults and foreclosure occurs. Is the buyer liable for the deficiency?

• A. No, the buyer is not liable.
• B. Yes, the buyer becomes primarily liable for the debt; the seller remains secondarily liable unless released.
• C. Only the seller is liable.
• D. The bank may not pursue either party.

Answer: (B)

When a buyer signs to assume a mortgage, the buyer becomes the primary obligor to the lender for the debt. The seller remains liable only as a secondary party (a surety) unless the lender releases them. So, if the buyer defaults and foreclosure occurs, the deficiency—what remains after the sale—is owed by the primary obligor, the buyer. The lender can pursue the buyer for that deficiency, and can also pursue the seller if the lender hasn’t been released from the seller’s secondary liability. This is why the correct outcome is that the buyer is primarily liable for the deficiency, while the seller remains secondarily liable unless released.