Assignment

Assignment: The legal record of the transfer of a mortgage from one homeowner to another.

Assignment: An assignment of mortgage is a document that shows that a mortgage has been transferred from the bank or homeowner to a third party. Assignments of mortgage are commonly used when banks sell mortgages to other banks or mortgage service providers.

Understanding an Assignment of Mortgage

An assignment of mortgage, or mortgage assignment, is a legal process through which an existing mortgage is transferred from an original lender or borrower to a new lender or borrower. Mortgage assignments are frequently used when a mortgage lender assigns an existing mortgage loan to another lender. They are also employed when a homeowner assigns their existing mortgage loan to a new buyer.

In this process, the new buyer accepts the assignment, without formally assuming the loan. By doing so, the new buyer, or assignee is contractually required to make monthly payments on the loan, as well as accept all the terms of the original mortgage contract.

Though certain mortgage contracts contain a due-on-sale clause, which allows the bank to call the loan due in the event of a sale by the original borrower, banks rarely exercise that option as long as the new homeowner continues to make payments on the existing mortgage loan.

There are certain stipulations to keep in mind when executing a mortgage assignment.

According to mortgage expert Robert McLister, “With an assignment, it’s important to remember that the key terms of the mortgage, such as the mortgage amount, amortization and loan-to-value, may not be increased.

“If a borrower wishes to change lenders and also change the key terms of his/her mortgage, then an assignment typically cannot be used. In that case, a refinance is usually required (with the aid of a lawyer). If you’re doing a “straight switch” of a regular mortgage you’ll often pay nothing but your existing lender’s discharge fee to change lenders.

Assignment

Assignment: The legal record of the transfer of a mortgage from one homeowner to another.

Assignment: An assignment of mortgage is a document that shows that a mortgage has been transferred from the bank or homeowner to a third party. Assignments of mortgage are commonly used when banks sell mortgages to other banks or mortgage service providers.

Understanding an Assignment of Mortgage

An assignment of mortgage, or mortgage assignment, is a legal process through which an existing mortgage is transferred from an original lender or borrower to a new lender or borrower. Mortgage assignments are frequently used when a mortgage lender assigns an existing mortgage loan to another lender. They are also employed when a homeowner assigns their existing mortgage loan to a new buyer.

In this process, the new buyer accepts the assignment, without formally assuming the loan. By doing so, the new buyer, or assignee is contractually required to make monthly payments on the loan, as well as accept all the terms of the original mortgage contract.

Though certain mortgage contracts contain a due-on-sale clause, which allows the bank to call the loan due in the event of a sale by the original borrower, banks rarely exercise that option as long as the new homeowner continues to make payments on the existing mortgage loan.

There are certain stipulations to keep in mind when executing a mortgage assignment.

According to mortgage expert Robert McLister, “With an assignment, it’s important to remember that the key terms of the mortgage, such as the mortgage amount, amortization and loan-to-value, may not be increased.

“If a borrower wishes to change lenders and also change the key terms of his/her mortgage, then an assignment typically cannot be used. In that case, a refinance is usually required (with the aid of a lawyer). If you’re doing a “straight switch” of a regular mortgage you’ll often pay nothing but your existing lender’s discharge fee to change lenders.

Scroll to top