assignment in mortgage

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• Assignment of Mortgage

Lenders or holders of mortgages often assign them to other lenders. The person or entity that receives the assignment will step into the place of the original lender. An assignment of mortgage should be in the appropriate format to provide notice to others. It should describe the property so that everyone understands which piece of property is attached to the assignment. It should also include the names of the various parties, contact information, and the date of the assignment. When a lender assigns a mortgage to another lender, the document will need to state the identity of the borrower. If a borrower assumes a mortgage, it should identify the lender.

Mortgages are often transferred to other lenders several times before being paid off. Lenders do not need to notify borrowers when selling a mortgage. Borrowers do not have a say in whether the mortgage is sold to another lender. However, the new lender is supposed to notify the borrower of the sale and give the borrower information on how to pay the new lender. In some cases, a borrower can try to renegotiate the terms of the loan, or, if the borrower does not want to continue with the new lender on the loan, the borrower can apply for a new mortgage to pay off the sold loan. When a new borrower assumes a mortgage, however, they must show that they have the financial ability to pay off the mortgage and that they understand the terms of the obligation that they have undertaken.

In Massachusetts, unlike some other jurisdictions, an assignment or mortgage must be in writing and then filed in the Registry of Deeds. A blank assignment is invalid. This is an important point because under case law, if the assignment is blank, a foreclosure sale related to the mortgage will be void. A foreclosing entity must obtain an assignment of mortgage in order to foreclose.

Once a mortgage has been paid, the holder should record a satisfaction in the proper written format to give notice to others that it no longer has a lien on the property.

Our Boston real estate attorneys can help you understand the requirements related to an assignment of mortgage and the consequences of assuming or assigning a mortgage. Our firm also advises and represents sellers, lenders, buyers, and associations in Cambridge, Andover, and Quincy, among other Massachusetts communities. Contact Pulgini & Norton at 781-843-2200 or through our online form for a free consultation with a home mortgage attorney.

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What is an Assignment of Mortgage?

In real estate, an assignment of mortgage is the transfer of a mortgage, or mortgage note , to another party which typically happens on the servicing side or lender side. This is commonly seen one when lender sells or transfers your mortgage to another lender. Lenders typically have the right to to sell mortgages and assign them to new parties, but don’t typically allow borrowers to do the same. When a borrower transfers their mortgage obligation to a new party, this is called an assumed mortgage.

Assignment of Mortgage Examples

Examples where you will find assignment of mortgages include:

• Example 1. A lender selling your mortgage to another lender for servicing.

Here’s Property Shark’s definition of assignment of mortgage .

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What Is an Assignment of Mortgage?

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An assignment of mortgage is a document which indicates that a mortgage has been transferred from the original lender or borrower to a third party. Assignments of mortgage are more commonly seen when lenders sell mortgages to other lenders. When someone has what is known as an assumable mortgage, it is possible for the borrower to transfer the mortgage to another person, in which case an assignment of mortgage will need to be filed to record the transaction.

This document indicates that the loan obligation has been transferred. It usually describes the property so that there is no confusion about which piece of real estate is under discussion. It should include the name of the original party, along with the name of the third party, with contact information and the date that the assignment of mortgage becomes valid. In the case of an assignment of mortgage between lenders, the document notes the identity of the borrower, while assumed mortgages identify the lender and indicate that the transfer took place between borrowers.

Lenders routinely sell mortgages, and in fact a mortgage may be transferred multiple times before it has been paid off. Lenders are not required to notify borrowers when they sell mortgages, and borrowers do not have an opportunity to contest the sale. The new lender is required to send out a notification indicating that a sale took place and providing information about how to make mortgage payments to the new lender. The borrower may attempt to negotiate a change in terms, or if the borrower does not want to work with the new lender, it may be possible to apply for a new mortgage to pay off the old one.

With an assumable mortgage, the issue is a bit trickier. Lenders do not want borrowers to assign their mortgages to people who cannot keep up with the payments, as then they will be faced with having to foreclose and sell the property, and this adds to the expense of servicing the loan. As a result, people who wish to assume a mortgage must demonstrate that they are financially capable of taking on the loan, and that they fully understand the terms of the loan.

An assignment of mortgage will be filed in the same government office which handles ownership records, property taxes, and related matters. People should be aware that sometimes an assignment of mortgage is not recorded for several months, especially if there is a backlog of documenting material which needs to be gone through.

If borrowers receive a notice in the mail indicating that their mortgage has been transferred, they should call their lenders to confirm the sale and ask who the mortgage was sold to. It is also advisable to check the records office to confirm that an assignment of mortgage has been followed. Borrowers should be aware that some scammers prey on people by claiming that their mortgages have been transferred when this is not actually the case.

Following via: law.justia.com

CHAPTER 701

ASSIGNMENT AND CANCELLATION OF MORTGAGES

701.01  Assignment.

701.02  Assignment not effectual against creditors unless recorded and indicated in title of document; applicability.

701.03  Cancellation.

701.04  Cancellation of mortgages, liens, and judgments.

701.041  Title insurer; mortgage release certificate.

701.06  Certain cancellations and satisfactions of mortgages validated.

701.01  Assignment. –Any mortgagee may assign and transfer any mortgage made to her or him, and the person to whom any mortgage may be assigned or transferred may also assign and transfer it, and that person or her or his assigns or subsequent assignees may lawfully have, take and pursue the same means and remedies which the mortgagee may lawfully have, take or pursue for the foreclosure of a mortgage and for the recovery of the money secured thereby.

History. –s. 1, Dec. 11, 1834; RS 1985; GS 2498; RGS 3840; CGL 5743; s. 782, ch. 97-102.

701.02  Assignment not effectual against creditors unless recorded and indicated in title of document; applicability. —

(1)  An assignment of a mortgage upon real property or of any interest therein, is not good or effectual in law or equity, against creditors or subsequent purchasers, for a valuable consideration, and without notice, unless the assignment is contained in a document that, in its title, indicates an assignment of mortgage and is recorded according to law.

(2)  This section also applies to assignments of mortgages resulting from transfers of all or any part or parts of the debt, note or notes secured by mortgage, and none of same is effectual in law or in equity against creditors or subsequent purchasers for a valuable consideration without notice, unless a duly executed assignment be recorded according to law.

(3)  Any assignment of a mortgage, duly executed and recorded according to law, purporting to assign the principal of the mortgage debt or the unpaid balance of such principal, shall, as against subsequent purchasers and creditors for value and without notice, be held and deemed to assign any and all accrued and unpaid interest secured by such mortgage, unless such interest is specifically and affirmatively reserved in such an assignment by the assignor, and a reservation of such interest or any part thereof may not be implied.

(4)  Notwithstanding subsections (1), (2), and (3) governing the assignment of mortgages, chapters 670-680 of the Uniform Commercial Code of this state govern the attachment and perfection of a security interest in a mortgage upon real property and in a promissory note or other right to payment or performance secured by that mortgage. The assignment of such a mortgage need not be recorded under this section for purposes of attachment or perfection of a security interest in the mortgage under the Uniform Commercial Code.

(5)  Notwithstanding subsection (4), a creditor or subsequent purchaser of real property or any interest therein, for valuable consideration and without notice, is entitled to rely on a full or partial release, discharge, consent, joinder, subordination, satisfaction, or assignment of a mortgage upon such property made by the mortgagee of record, without regard to the filing of any Uniform Commercial Code financing statement that purports to perfect a security interest in the mortgage or in a promissory note or other right to payment or performance secured by the mortgage, and the filing of any such financing statement does not constitute notice for the purposes of this section. For the purposes of this subsection, the term “mortgagee of record” means the person named as the mortgagee in the recorded mortgage or, if an assignment of the mortgage has been recorded in accordance with this section, the term “mortgagee of record” means the assignee named in the recorded assignment.

History. –s. 1, ch. 6909, 1915; RGS 3841; CGL 5744; s. 13, ch. 20954, 1941; s. 2, ch. 89-41; s. 20, ch. 2005-241.

701.03  Cancellation. –Whenever the amount of money due on any mortgage shall be fully paid, the mortgagee or assignee shall within 60 days thereafter cancel the same in the manner provided by law.

History. –RS 1986; GS 2499; RGS 3842; CGL 5745; s. 171, ch. 73-333.

701.04  Cancellation of mortgages, liens, and judgments. —

(1)  Within 14 days after receipt of the written request of a mortgagor, the holder of a mortgage shall deliver to the mortgagor at a place designated in the written request an estoppel letter setting forth the unpaid principal balance, interest due, and the per diem rate. Whenever the amount of money due on any mortgage, lien, or judgment shall be fully paid to the person or party entitled to the payment thereof, the mortgagee, creditor, or assignee, or the attorney of record in the case of a judgment, to whom such payment shall have been made, shall execute in writing an instrument acknowledging satisfaction of said mortgage, lien, or judgment and have the same acknowledged, or proven, and duly entered of record in the book provided by law for such purposes in the proper county. Within 60 days of the date of receipt of the full payment of the mortgage, lien, or judgment, the person required to acknowledge satisfaction of the mortgage, lien, or judgment shall send or cause to be sent the recorded satisfaction to the person who has made the full payment. In the case of a civil action arising out of the provisions of this section, the prevailing party shall be entitled to attorney’s fees and costs.

(2)  Whenever a writ of execution has been issued, docketed, and indexed with a sheriff and the judgment upon which it was issued has been fully paid, it shall be the responsibility of the party receiving payment to request, in writing, addressed to the sheriff, return of the writ of execution as fully satisfied.

History. –s. 1, ch. 4138, 1893; s. 1, ch. 4918, 1901; GS 2500; RGS 3843; CGL 5746; s. 1, ch. 80-17; s. 15, ch. 93-250; s. 12, ch. 94-170.

701.041  Title insurer; mortgage release certificate. —

(1)  DEFINITIONS.–For purposes of this section:

(a)  “Mortgage” means a mortgage or mortgage lien on an interest in real property in this state, including any modifications thereof, given to secure a loan in the principal amount of $500,000 or less, other than a mortgage securing an open-end or revolving credit agreement.

(b)  “Mortgagee” means:

1.  The grantee of a mortgage; or

2.  If a mortgage has been assigned of record, the last person to whom the mortgage has been assigned of record.

(c)  “Mortgage servicer” means the last person to whom a mortgagor or the mortgagor’s successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage. A person transmitting a payoff statement is the mortgage servicer for the mortgage described in the payment statement.

(d)  “Mortgagor” means the grantor of a mortgage.

(e)  “Payoff statement” means a statement of the amount of:

1.  The unpaid balance of a loan secured by a mortgage, including principal, interest, and any other charges properly due under or secured by the mortgage.

2.  Interest on a per-day basis for the unpaid balance.

(f)  “Record” means to record with the clerk of the circuit court or the comptroller in the county or counties in which the real property securing the mortgage is located.

(g)  “Title insurer” means a corporation or other business entity authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 624.

(2)  CERTIFICATE OF RELEASE.–An officer or duly appointed agent of a title insurer may, on behalf of a mortgagor or a person who acquired from the mortgagor title to all or a part of the property described in a mortgage, execute a certificate of release that complies with the requirements of this section and record the certificate of release in the real property records of each county in which the mortgage is recorded if a satisfaction or release of the mortgage has not been executed and recorded after the date payment in full of the loan secured by the mortgage was made in accordance with a payoff statement furnished by the mortgagee or the mortgage servicer.

(3)  CONTENTS.–A certificate of release executed under this section must contain:

(a)  The name of the mortgagor, the name of the original mortgagee, and, if applicable, the mortgage servicer; the date of the mortgage; the date of recording; and the volume and page or document number in the real property records in which the mortgage is recorded, together with similar information for the last recorded assignment of the mortgage.

(b)  A statement that the mortgage, including any modifications thereof, was in the principal amount of $500,000 or less.

(c)  The name of the title insurer filing the certificate of release, a statement that the person executing the certificate of release is an officer or a duly appointed agent of the title insurer, a statement that the title insurer is authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 624 or chapter 626, and, if executed by a duly appointed agent, shall further provide the recording information of the appointment of such agent as required by subsection (4).

(d)  A statement that the certificate of release is made on behalf of the mortgagor or a person who acquired title from the mortgagor to all or a part of the property described in the mortgage.

(e)  A statement that the mortgagee or mortgage servicer provided a payoff statement which was used to make payment in full of the unpaid balance of the loan secured by the mortgage.

(f)  A statement that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the payoff statement and that a copy of the certificate of release was sent to the mortgagee or mortgage servicer that provided the payoff statement.

(4)  EXECUTION.–

(a)  A certificate of release authorized by subsection (2) must be duly executed, sworn to or affirmed under penalty of perjury before a notary public, and recorded and may be executed by an officer of a title insurer or by a duly appointed agent of a title insurer. Such delegation to an agent by a title insurer shall not relieve the title insurer of any liability for damages caused by the agent for the execution or recordation of a certificate of release.

(b)  The appointment of an agent must be duly executed, acknowledged, and recorded by an officer of a title insurer and must state:

1.  The title insurer as the principal.

2.  The identity of the person, partnership, or corporation authorized to act as agent to execute and record certificates of release provided for in this section on behalf of the title insurer.

3.  That the agent has the full authority to execute and record certificates of release provided for in this section on behalf of the title insurer.

(c)  A separate appointment of agent shall not be necessary for each certificate of release provided that at least one such appointment is recorded in the county in which the mortgaged property is located. The appointment of agent must be rerecorded where necessary to establish authority of the agent, but such authority shall continue until a revocation of appointment is recorded in the office of the county recorder in which the appointment of agent was recorded.

(d)  After recordation of a title insurer’s revocation of appointment in the office of the county recorder in which the appointment was recorded, the agent whose appointment is revoked in such county shall have no further authority to execute or record certificates of release as provided in this section on behalf of that title insurer with respect to any mortgages recorded in that county, and no such certificate of release thereafter executed or recorded by that agent on behalf of that title insurer shall be effective to release any mortgage recorded in that county.

(5)  EFFECT.–For purposes of releasing the mortgage, a certificate of release containing the information and statements provided for in subsection (3) and executed as provided in subsection (4) is entitled to be recorded with the county recorder and operates as a release of the mortgage described in the certificate of release. The county recorder shall rely upon the certificate to release the mortgage. Recording of a certificate of release by a title insurer or its agent shall not relieve the mortgagor, or the mortgagor’s successors or assigns, from any personal liability on the loan or other obligations secured by the mortgage. A certificate of release recorded pursuant to this section fulfills any other obligation of the mortgagee or mortgage servicer to file a satisfaction or release of the mortgage.

(6)  LIABILITY OF TITLE INSURER.–

(a)  In addition to any other remedy provided by law, a title insurer recording a certificate of release under this section shall be liable to the holder of the obligation secured by the mortgage for actual damage sustained due to the recording of the certificate of release. Reasonable costs and attorneys’ fees shall be awarded to the prevailing party.

(b)  The title insurer named in a certificate of release filed by a duly appointed agent shall be liable pursuant to this subsection without regard to whether the title insurer authorized the specific certificate of release recorded by the agent.

(c)  The title insurer shall have no liability under this subsection if the title insurer shows that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the payoff statement furnished by the mortgagee or the mortgage servicer.

(d)  Liability of a title insurer pursuant to this section shall be considered to be a title insurance claim on real property in this state pursuant to s. 627.7865.

(7)  RECORDING.–If a mortgage is recorded in more than one county and a certificate of release is recorded in one of such counties, a certified copy of the certificate of release may be recorded in another of such counties with the same effect as the original. In all cases, the certificate of release shall be entered and indexed as satisfactions of mortgage are entered and indexed.

(8)  APPLICATION.–This section applies only to a mortgage, including any modifications of such mortgage, in the principal amount of $500,000 or less.

(9)  PREMIUM.–The Financial Services Commission shall adopt rules establishing an actuarially sound premium charge to be made for each certificate of release recorded pursuant to this section.

History. –s. 1, ch. 2005-122.

701.06  Certain cancellations and satisfactions of mortgages validated. –All cancellations or satisfactions of mortgages made prior to the enactment of chapter 4138, Acts of 1893, by the mortgagee or assignee of record of such mortgage entering same on the margin of the record of such mortgage in the presence of the custodian of such record and attested by the said custodian and signed by said mortgagee or assignee of record of such mortgage, shall be valid and effectual for every purpose as if the same had been done subsequent to the enactment of chapter 4138, Acts of 1893.

History. –s. 1, ch. 14763, 1931; CGL 1936 Supp. 5746(1).

FORECLOSURE MILL EMPLOYEE SIGNATURES (FORGERIES) ON ASSIGNMENT OF MORTGAGES.

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Written by Attorney Todd Carney .  Updated November 26, 2021

If you’re like most people who want to purchase a home, you’ll start by going to a bank or other lender to get a mortgage loan. Though you can choose your lender, after the mortgage loan is processed, your mortgage may be transferred to a different mortgage servicer . A transfer is also called an assignment of the mortgage. 

No matter what it’s called, this change of hands may also change who you’re supposed to make your house payments to and how the foreclosure process works if you default on your loan. That’s why if you’re a homeowner, it’s important to know how this process works. This article will provide an in-depth look at what an assignment of a mortgage entails and what impact it can have on homeownership.

Assignment of Mortgage – The Basics

When your original lender transfers your mortgage account and their interests in it to a new lender, that’s called an assignment of mortgage. To do this, your lender must use an assignment of mortgage document. This document ensures the loan is legally transferred to the new owner. It’s common for mortgage lenders to sell the mortgages to other lenders. Most lenders assign the mortgages they originate to other lenders or mortgage buyers.

Home Loan Documents

When you get a loan for a home or real estate, there will usually be two mortgage documents. The first is a mortgage or, less commonly, a deed of trust . The other is a promissory note. The mortgage or deed of trust will state that the mortgaged property provides the security interest for the loan. This basically means that your home is serving as collateral for the loan. It also gives the loan servicer the right to foreclose if you don’t make your monthly payments. The promissory note provides proof of the debt and your promise to pay it.

When a lender assigns your mortgage, your interests as the mortgagor are given to another mortgagee or servicer. Mortgages and deeds of trust are usually recorded in the county recorder’s office. This office also keeps a record of any transfers. When a mortgage is transferred so is the promissory note. The note will be endorsed or signed over to the loan’s new owner. In some situations, a note will be endorsed in blank, which turns it into a bearer instrument. This means whoever holds the note is the presumed owner.

Using MERS To Track Transfers

Banks have collectively established the Mortgage Electronic Registration System , Inc. (MERS), which keeps track of who owns which loans. With MERS, lenders are no longer required to do a separate assignment every time a loan is transferred. That’s because MERS keeps track of the transfers. It’s crucial for MERS to maintain a record of assignments and endorsements because these land records can tell who actually owns the debt and has a legal right to start the foreclosure process.

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Assignment of Mortgage Requirements and Effects

The assignment of mortgage needs to include the following:

The original information regarding the mortgage. Alternatively, it can include the county recorder office’s identification numbers. 

The borrower’s name.

The mortgage loan’s original amount.

The date of the mortgage and when it was recorded.

Usually, there will also need to be a legal description of the real property the mortgage secures, but this is determined by state law and differs by state.

Notice Requirements

The original lender doesn’t need to provide notice to or get permission from the homeowner prior to assigning the mortgage. But the new lender (sometimes called the assignee) has to send the homeowner some form of notice of the loan assignment. The document will typically provide a disclaimer about who the new lender is, the lender’s contact information, and information about how to make your mortgage payment. You should make sure you have this information so you can avoid foreclosure.

Mortgage Terms

When an assignment occurs your loan is transferred, but the initial terms of your mortgage will stay the same. This means you’ll have the same interest rate, overall loan amount, monthly payment, and payment due date. If there are changes or adjustments to the escrow account, the new lender must do them under the terms of the original escrow agreement. The new lender can make some changes if you request them and the lender approves. For example, you may request your new lender to provide more payment methods.

Taxes and Insurance

If you have an escrow account and your mortgage is transferred, you may be worried about making sure your property taxes and homeowners insurance get paid. Though you can always verify the information, the original loan servicer is responsible for giving your local tax authority the new loan servicer’s address for tax billing purposes. The original lender is required to do this after the assignment is recorded. The servicer will also reach out to your property insurance company for this reason.  

If you’ve received notice that your mortgage loan has been assigned, it’s a good idea to reach out to your loan servicer and verify this information. Verifying that all your mortgage information is correct, that you know who to contact if you have questions about your mortgage, and that you know how to make payments to the new servicer will help you avoid being scammed or making payments incorrectly.

Let's Summarize…

In a mortgage assignment, your original lender or servicer transfers your mortgage account to another loan servicer. When this occurs, the original mortgagee or lender’s interests go to the next lender. Even if your mortgage gets transferred or assigned, your mortgage’s terms should remain the same. Your interest rate, loan amount, monthly payment, and payment schedule shouldn’t change. 

Your original lender isn’t required to notify you or get your permission prior to assigning your mortgage. But you should receive correspondence from the new lender after the assignment. It’s important to verify any change in assignment with your original loan servicer before you make your next mortgage payment, so you don’t fall victim to a scam.

Attorney Todd Carney

Attorney Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such... read more about Attorney Todd Carney

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Real Estate Terms

Mortgage Assignment Definition

September 1, 2023

By Dyana Branchen

When the mortgage lender assigns their mortgage and its interest to a new lender, it’s called mortgage assignment . The lender uses an assignment-of-mortgage document to transfer the mortgage legally.

It is important for real estate students and agents to understand how mortgage assignment takes place. As a real estate professional, I will help you define mortgage assignments for your real estate exam.

In this post, I’ll break down the mortgage assignment definition and explain it with the help of examples. Let’s get started!

What Is Mortgage Assignment?

A mortgage assignment is when a mortgage lender transfers a mortgage account and its interests to another lender. Assignment of mortgage is a document that indicates the transfer of mortgage between the lenders. This type of assignment is mostly seen when a mortgage lender sells the mortgage to a new lender.

Mortgage lenders have the right to assign and sell their mortgages to other parties, while borrowers are not. If a borrower transfers their mortgage to another person, it is called an assumed mortgage.

Mortgage lenders aren’t required to inform the borrower when they transfer their mortgages. However, the new lender has to notify the borrower about the mortgage assignment and set the payment schedule with the borrower. If the borrower doesn’t want to work with the lender, they can apply for a new mortgage and pay off the old mortgage.

How Does Assignment of Mortgage Take Place?

Mortgage lenders often assign their mortgages to other lenders to free up money. When a mortgage assignment occurs, the new lender steps in place of the original lender and takes their mortgage obligations. The assignment of mortgage document has the following contents:

• The legal description of the property in discussion (the collateral)
• Name of the original lender
• Name of the third-party (new lender)
• Name of the borrower
• The jurisdiction where it was recorded
• The amount of money loaned originally
• The date on which the assignment of mortgage becomes valid

After preparing the assignment of mortgage document, the mortgage lender files it in a government office that deals with property taxes, ownership records, and other real estate matters. After the mortgage has been filed and transferred to the new lender, the borrower is notified. The borrower can confirm the sale of the mortgage and inquire about the new lender. They can also negotiate mortgage rates and terms.

Once the original lender has assigned the mortgage to a new lender, they will not receive mortgage payments. The borrower will pay the monthly mortgage payments to the new lender after the assignment of mortgage. However, the original lender will free up capital by assigning the mortgage to a new lender. This will help the original mortgage lender to offer more mortgages and generate more income.

After the borrower has paid the mortgage in full to the new lender, the lender must file a satisfaction of mortgage . After the satisfaction of mortgage has been recorded, the borrower’s property will be free of the lien.

Effects of Mortgage Assignments

When a lender transfers a mortgage, the original terms of the mortgage remain the same. The interest rate, monthly payments, and total payments to pay off the mortgage remain unchanged. The term and rates after mortgage assignment are the same as at closing.

However, some things might change. For instance, the borrower must check the payment method and know where the payments should go. This is important to know as the borrower should make the payments to the right holder of the mortgage.

Another thing that might change after mortgage assignment is the process that the lender will follow if the borrower defaults. Mortgage lenders use different notification methods, which the borrower must be familiar with to avoid confusion. The following are the effects of the assignment of mortgage:

Notice to Borrower

The original lender doesn’t send notice to the borrower for assigning the mortgage. They don’t need the permission of the borrower to transfer the mortgage either. However, the new mortgage holder has to notify the borrower about the mortgage assignment.

Modification

No modification occurs after mortgage assignment. The original features of the mortgage remain the same after the assignment of the mortgage. The mortgage balance, interest rate, and monthly payments will not change.

The changes to an escrow account are also down according to the original escrow agreement. However, if there is a modification, such as an additional payment method, it would be at the request of the borrower and the mortgage lender’s discretion.

Effects on Escrow Payments

Mortgage lenders receive the bills for the property from the municipality. However, when the lender transfers the mortgage to another lender and files it at the local recorder’s office, a copy is sent to the municipality too. After the assignment of mortgage, the taxing municipality sends the tax bills to the new lender’s address.

Mortgage Assignment Example

Alice wants to purchase a property. After making a down payment, she has to pay $175,000 to the seller to purchase the property. Bank-A offers $175,000 to Alice, and she purchases the house. The following is the breakdown of the mortgage:

• Mortgage balance : $175,000
• Mortgage term : 15 years
• Rate : 4.5%
• Monthly payments : $1,519

Alice has to pay $1,519 to Bank-A every month, which includes the interest and principal. After five years, Bank-A decides to sell the mortgage to Bank B. At this time, Alice has a remaining balance of $119,657.98, which she has to pay to Bank-A.

Bank-A files for the assignment of mortgage documents at the local county office, and Bank-B takes the mortgage from here. Bank-B notifies Alice she has to make the monthly payments of $1,519 to Bank-B now. However, the remaining mortgage term is 10 years, as she has already paid off for the previous 5 years.

Frequently Asked Questions

Mortgage assignment is the process of mortgage transfer from one lender to another lender. The original lender does this transfer to a new lender. Usually, a mortgage assignment is done for selling the mortgage to a third party.

Who Files the Assignment of Mortgage?

The original lender files the assignment of mortgage at the local county’s office. The new lender notifies the borrower about the assignment of mortgage.

What Happens After Mortgage Assignment?

After the mortgage assignment, the new lender takes the role of the original lender. The borrower has to make mortgage payments to the new lender after the mortgage assignment. The rates and terms on the mortgage with the new lender remain the same as they were with the previous lender.

Why Do Lenders Sell Mortgages?

Lenders mostly sell mortgages for two reasons. First, they want to free up capital to provide more mortgages to other borrowers. Second, they want to generate income by selling the mortgage to another lender. The original lender charges a fee from the new lender, and this way, cash is generated.

What Is Assignment Fraud?

Assignment fraud is when a fake company sends a notice to the borrower and acts like a new lender. This happens when the original lender hasn’t assigned the mortgage to any other lender. In this case, there is a chance that the borrower sends payments to the fake company, mistaking it as a mortgage assignment. Thus, it is important for the borrower to confirm with the original lender before making any mortgage payment to anyone else.

What to Know for the Real Estate Exam

A mortgage assignment is when the original lender transfers the mortgage to a new lender. This type of assignment is common between lenders who sell mortgages to each other. Lenders sell mortgages to free up capital and buy more mortgages to offer them to other borrowers. Mortgage assignment doesn’t change anything for the borrower, except that the borrower has to make mortgage payments to the new lender.

Do you now understand how mortgage assignment works? If you are unclear about something, let me know in the comments. Once you’re done, go through these Real Estate Terms  to learn more definitions.

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