If a lender allows an old note and mortgage to be substituted with a new one in the buyer's name, this is known as?

The scenario described involves substituting an old note and mortgage with a new one in the buyer's name, which is termed novation. Novation occurs when one party in a contract is replaced with another party, resulting in a new contract that extinguishes the obligations of the original party. In the case of the mortgage, the lender agrees to release the original borrower from the loan obligations and repaces them with the new borrower, thereby creating a new legal agreement.

With novation, the lender accepts the new borrower under the same or adjusted terms, effectively allowing for the original loan to be nullified and a new loan established. This process differs from other terms like modification, which typically refers to changing the terms of an existing agreement without creating a new one, or assumption of mortgage, which may not involve a complete replacement of the original note but merely allows the new buyer to take over the payments without fully removing the old borrower's obligations. Similarly, refinance involves replacing an existing loan with a new one but does not typically involve changing the borrowers involved in the original loan agreement.