Transfers or Assigments of Mortgages

Erin received a notice from her mortgage company in the mail. The notice explained that her mortgage company had sold her mortgage loan, along with many others, to another mortgage company. The notice explained where Erin should mail her next payment and other things about the new mortgage company. The notice also explained that the new mortgage company would "record" notice of the transfer among the appropriate public records so that others would be on notice of its security interest in Erica's home.

A mortgage is a document that evidences a lender's security interest in a home. At the time the lender makes the loan, the lender records the mortgage among the appropriate public records so that others are put on notice of the lender's interest in the home.

What Happens in the Event of an Assignment or Transfer?

In the real estate finance industry, it is not uncommon for a mortgage loan to be sold one or more times during the life of the loan. When a mortgage lender transfers or assigns its interest in a mortgage loan to another party, some type of written document must be filed to put others on notice of the transfer. Typically, the form is prescribed by state law. The relevant law varies from one state to another, and the law of a particular state should be consulted for further details. Even though state law differs, some common elements are found in nearly all such documents:

  • the name of the borrower;
  • the name of the original lender;
  • the party to whom the mortgage was assigned or transferred;
  • the date of the assignment or transfer;
  • the original principal sum of the mortgage;
  • the information as to where the original mortgage was recorded in the public records (for example a book and page number); and
  • a description of the property encumbered by the mortgage.

If a lender assigns or transfers a mortgage, it is important to double-check the mortgage statements from both lenders to make sure that all payments are credited against the outstanding indebtedness. Furthermore, to the extent the borrower receives information concerning the assignment or transfer, the borrower should retain the information in a safe place, among other important papers, so that it may be easily located in the event the need to do so arises in the future.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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