The Basics of Mortgage Assignments

A mortgage assignment refers to transferring a mortgage from one party to another. This typically occurs when the original lender sells the mortgage loan to another lender or investor.

Key Takeaways

Here's How It works

1. 1. Transfer of Rights: In a mortgage assignment, the original lender (assignor) transfers all rights, interests, and obligations associated with the mortgage to a new lender or investor (assignee).
2. 2. Legal Process: The assignment of a mortgage is a legal process that requires proper documentation and adherence to state laws and regulations. This documentation includes an assignment of mortgage form, which legally transfers mortgage ownership from the assignor to the assignee.
3. 3. Effect on Borrower: A mortgage assignment typically does not change the borrower's loan terms. The borrower continues to make payments to the new lender or servicer, following the original terms and conditions of the mortgage agreement.
4. 4. Notification to Borrower: Borrowers are usually notified of a mortgage assignment through a formal notification letter from the original lender or the new lender. This letter informs them of the transfer of servicing rights and provides instructions for future mortgage payments.
5. 5. Servicing Rights vs. Ownership: It's important to note that a mortgage assignment involves the transfer of servicing rights, not the actual ownership of the loan itself. The assignee becomes responsible for managing the loan, including collecting payments and handling any customer service inquiries, but the ownership of the loan remains with the investor who purchased it.

Conclusion

Overall, mortgage assignments are common in the mortgage industry and allow lenders to manage their loan portfolios more effectively. They do not typically impact borrowers' rights or obligations under the mortgage agreement but may result in changes to the entity that collects mortgage payments and provides customer service.

FAQs

1. What is the difference between a mortgage assignment and an assumption?

A mortgage assignment involves the transfer of a mortgage from one lender to another. In contrast, a mortgage assumption occurs when a new borrower takes over the existing mortgage from the original borrower. The new borrower assumes responsibility for the loan, including making payments, but the loan terms remain the same.

2. Can I refuse a mortgage assignment if I disagree with the new lender or servicer? 

Generally, borrowers cannot refuse a mortgage assignment if it is done under the terms of the mortgage agreement and applicable laws. However, borrowers have rights under the Real Estate Settlement Procedures Act (RESPA). They may have recourse if they believe their rights are being violated or if there are errors in the transfer process.

3. How does a mortgage assignment affect my credit score? 

A mortgage assignment typically does not directly impact your credit score if you make timely payments and adhere to the loan terms. However, any errors or inaccuracies in the transfer process or reporting by the new lender or servicer could affect your credit score.