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Understanding the Assignment of Mortgages: What You Need To Know

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A mortgage is a legally binding agreement between a home buyer and a lender that dictates a borrower's ability to pay off a loan. Every mortgage has an interest rate, a term length, and specific fees attached to it.

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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What Is Assignment of Mortgage: What You Need to Know

We will explore the idea of mortgage assignment in this thorough guide, going over its definition, steps involved, potential consequences, and more. So read on to learn more about this important facet of the real estate market, whether you’re a homeowner, a prospective buyer, or just inquisitive about mortgages.

What is Assignment of Mortgage?

The assignment of mortgage, often simply referred to as mortgage assignment , is a legal process that involves the transfer of a mortgage loan from one party to another. This transfer typically occurs between mortgage lenders or financial institutions and is a common practice within the mortgage industry.

The Key Parties Involved

• Assignor: The person transferring the mortgage is known as the assignor. The initial lender or financial organization that gave the borrower the mortgage loan is often the assignor.
• Assignee: The assignee is the party receiving the mortgage assignment. This could be another lender or financial institution that is buying the mortgage, often as part of a financial transaction.
• Borrower: The borrower is the individual or entity that initially took out the mortgage loan to finance the purchase of a property.

Why is Assignment of Mortgage Necessary?

Assignment of mortgage occurs for various reasons, and it serves specific purposes for all parties involved.

1. Loan Portfolio Management

Mortgage assignment is a common practice used by lenders to better manage their loan portfolios. Lenders might raise funds to offer more loans or issue new mortgages by selling or transferring mortgage loans to other financial organizations. This procedure aids in keeping their portfolios risk-balanced and liquid.

2. Risk Mitigation

Lenders may also assign mortgages to mitigate risk. When they transfer a mortgage to another entity, they are essentially transferring the associated risk as well. This can be a strategic move to reduce their exposure to potential defaults or financial instability.

3. Secondary Mortgage Market

The secondary mortgage market plays a significant role in the assignment of mortgages. Many mortgages are bundled together into mortgage-backed securities (MBS) and sold to investors. Assignment of mortgages allows lenders to participate in this market, which provides additional funding for new mortgage loans.

The Assignment of Mortgage Process

The process of assigning a mortgage, or deciding to sell your mortgage , involves several steps and legal requirements. Here’s a breakdown of the typical process:

1. Agreement between Parties

The assignor (original lender) and assignee (new lender or investor) must enter into a formal agreement outlining the terms and conditions of the new mortgage assignment. This agreement includes details such as the transfer price, terms of the loan, and any specific warranties or representations.

2. Notice to the Borrower

Once the agreement is in place, the borrower is typically notified of the assignment. This notice informs them that the servicing of their mortgage, including collecting monthly mortgage payments, will now be handled by the assignee. The borrower is advised to send future payments to the assignee.

3. Recordation

In many jurisdictions, mortgage assignments must be recorded with the appropriate government office, such as the county recorder’s office. This recordation provides public notice of the transfer and ensures that the assignee has a legal claim on the property.

4. Continuation of Monthly Mortgage Payments

For the borrower, the most noticeable change is the address where monthly payments are sent. Instead of sending payment to the original lender, the borrower will send them to the assignee. It is crucial for borrowers to keep records of these changes to avoid any confusion or missed payments.

Implications of Mortgage Assignment for Borrowers

While the assignment of mortgage primarily involves lenders and investors, it can have implications for borrowers as well. Here are some important considerations for borrowers:

1. No Change in Loan Terms

Borrowers should be aware that the assignment of mortgage does not change the terms of their loan. The interest rate, monthly payments, and other loan terms remain the same. The only change is the entity to which payments are made.

2. Proper Record-Keeping

Borrowers must maintain accurate records of their mortgage payments and correspondence related to the assignment. This helps ensure that payments are correctly credited and can be vital in case of any disputes or issues.

3. Communication with the New Lender

If borrowers have questions or concerns about their mortgage after the assignment, they should reach out to the new lender or servicer. Open and clear communication can help address any issues that may arise during the transition.

4. Property Taxes and Insurance

Borrowers are still responsible for property taxes and homeowner’s insurance, even after the assignment of mortgage. These payments are typically not affected by the transfer of the loan.

The Role of Mortgage Servicers

Mortgage servicers play a crucial role in the assignment of mortgage process. This section will explore the responsibilities of mortgage servicers, their relationship with borrowers, and how they manage mortgage loans on behalf of investors or lenders.

Legal Requirements and Regulations

Assignment is subject to various legal mortgage requirements and regulations that vary by jurisdiction. Discussing these legal aspects will help readers understand the legal framework governing the assignment of mortgages in their region and how it impacts the process.

Impact on Credit and Credit Reporting

The assignment of mortgage can have implications for borrowers’ credit reports and scores. Explore how mortgage assignment can affect credit histories, reporting by credit bureaus, and what borrowers can do to protect their credit during and after the assignment.

Assignment of Mortgage vs. Assumption of Mortgage

Differentiating between assignment of mortgage and assumption of mortgage is important. This section will explain the key differences, where one party takes over the mortgage and liability, while the other party merely transfers the loan to a new lender.

Impact on Property Taxes and Insurance

Taxes and insurance are essential components of homeownership. Explain how the assignment of mortgage may affect property tax payments and the homeowner’s insurance policy, as these are often escrowed into the monthly mortgage payment.

Potential Challenges and Disputes

Discuss common challenges or disputes that can arise during or after the assignment of mortgage, such as miscommunication, incorrect payment processing, or disputes over ownership rights. Offer advice on how to handle and resolve these issues.

Foreclosure and Default Scenarios

In the unfortunate event of mortgage default, understanding how the assignment of mortgage affects foreclosure proceedings is crucial. Explain how the assignee handles foreclosures and what options are available to borrowers facing financial difficulties.

Future Trends and Innovations

Explore emerging trends and innovations in the mortgage industry related to the assignment of mortgages. This could include the use of blockchain technology, digital mortgages, or other advancements that may impact the process.

In the complex world of real estate and mortgage financing , the assignment of mortgage plays a pivotal role in the movement of funds and management of risk. It allows lenders to efficiently manage their portfolios, mitigate risk, and participate in the secondary mortgage market. For borrowers, understanding the process and implications of mortgage assignment is essential to ensure the smooth continuation of their monthly mortgage payments.

As you navigate the world of homeownership or consider entering it, remember that the assignment of mortgage is a routine occurrence designed to benefit all parties involved. By staying informed and maintaining open communication with your lender or servicer, you can ensure that your mortgage loan remains a manageable and secure financial commitment.

In summary, purchase of mortgage is a vital mechanism within the mortgage industry that facilitates the transfer of mortgage loans from one party to another. This process helps lenders manage their portfolios, mitigate risk, and participate in the secondary mortgage market.

For borrowers, it means a change in the entity collecting their monthly mortgage payments but typically does not alter the terms of the original loan. Keeping accurate records and staying informed about the transition are crucial steps to ensure a smooth experience for homeowners. So, whether you’re a homeowner, lender, or investor, understanding assignment of mortgage is key to navigating the real estate landscape effectively.

This article is for informational purposes only and does not constitute legal, tax, or accounting advice.

Written by Alan Noblitt

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Daniel Moore

Demystifying mortgage assignment: what it means for borrowers and lenders, demystifying mortgage assignment: what it means for borrowers and lenders. explore the process, benefits, and risks in our comprehensive guide..

A mortgage assignment is a financial process in which an existing mortgage is transferred from the current holder to another party. It can occur for various reasons, such as a lender selling the mortgage to another bank or financial institution.

Understanding mortgage assignment is essential for both borrowers and lenders, as it impacts the terms and the handling of the loan.

This brief introduction lays the groundwork for a deeper understanding of what mortgage assignment entails and its significance in the mortgage industry.

Understanding Mortgage Assignment

Mortgage assignment is when the original lender transfers the mortgage to another lender or financial institution. This can occur for various reasons, including the original lender wanting to liquidate assets or reduce risk exposure.

Steps in the Mortgage Assignment Process

Discover the critical steps in the mortgage assignment process, from initiation to completion, ensuring a smooth transfer between lenders and maintaining clarity for borrowers.

The process begins when the original lender assigns the mortgage to another party. This decision can be driven by a strategic need to manage financial resources more effectively.

The original and the new lender agree on the terms of the assignment. This agreement includes details about the transfer of rights and the responsibilities each party will hold.

Notification

The borrower is informed about the mortgage assignment. Borrowers must receive clear and concise information about what this change means for their mortgage terms.

Legal Documentation

The transfer of a mortgage is formalized through legal documents. These documents are critical as they protect the rights of all parties involved, ensuring the assignment adheres to financial regulations.

The mortgage assignment is complete once all parties have signed the legal documents and all conditions are met. The new lender now holds the rights and duties originally held by the original lender.

Critical Points for Borrowers and Lenders

Borrowers should pay attention to any changes in the terms of their mortgage, and both lenders need to handle the legal aspects carefully to prevent future disputes. Proper communication between all parties can smooth the transition and maintain trust.

Mortgage assignment doesn't have to be a complicated affair. Clear communication and adherence to legal procedures can be a straightforward process beneficial to all involved.

Advantages of Mortgage Assignment for Lenders and Borrowers

Mortgage assignment offers significant benefits for both lenders and borrowers, each finding unique advantages in the process. Understanding these benefits can help parties make informed decisions about their mortgage management strategies.

For Lenders

Mortgage assignment allows lenders to free up capital and reduce risk by transferring the mortgage to another party, optimizing their financial assets efficiently.

Freeing Up Capital

One of the primary advantages for lenders in the process of mortgage assignment is the ability to free up capital.

By transferring the rights of a mortgage to another financial institution or entity, the original lender can redeploy resources into new lending opportunities or other investments. This can improve the lender's liquidity and enhance its financial flexibility.

Reducing Risk

Mortgage assignment also allows lenders to reduce their risk exposure. When a mortgage is transferred, the associated risks, such as the possibility of default, are also transferred to the acquiring party.

This shift can help the original lender manage its risk portfolio more effectively, allowing for a more stable financial position.

For Borrowers

For borrowers, mortgage assignment can lead to better loan terms and ensure the continuity of their mortgage agreement with a new lender.

Potential for Better Terms

For borrowers, one of the critical advantages of mortgage assignment is the potential to secure better terms from a new lender. This new lender may offer lower interest rates, better repayment conditions, or more favorable terms to attract and maintain clients.

As a result, borrowers can enjoy cost savings and a loan structure more aligned with their current financial situation.

Continuity of Agreement

Despite the change in the lender, mortgage assignment ensures that the continuity of the mortgage agreement is maintained. This means that borrowers do not have to renegotiate the fundamental terms of their mortgage.

Their payment schedule, interest rate, and loan duration remain the same, providing them stability and predictability in their financial planning.

Potential Risks and Disadvantages of Mortgage Assignment

Mortgage assignment can be a valuable tool for managing financial portfolios for borrowers and lenders.

However, it comes with certain risks and disadvantages that must be considered. This section outlines some challenges, helping both parties make informed decisions.

In the mortgage assignment process, lenders face significant challenges, including legal complexities and managing borrower expectations, which require careful navigation to avoid disputes and dissatisfaction.

Legal Complexities and Potential Disputes

One of the primary concerns for lenders in the process of mortgage assignment is the array of legal complexities that can arise.

Transferring a mortgage from one lender to another involves meticulous documentation and strict adherence to legal standards, which, if not properly managed, can lead to disputes with borrowers. These disputes may revolve around misunderstandings about the mortgage terms or the new lender's responsibilities.

Challenges in Managing Borrower Expectations

Lenders may also face challenges in managing borrower expectations during a mortgage assignment. Borrowers might not fully understand the implications of their mortgage being assigned to another lender, which can lead to dissatisfaction or conflict.

Lenders must clearly and effectively communicate what a mortgage assignment means and how it will affect the borrower's loan terms and conditions.

This section examines borrowers' challenges during mortgage assignments, focusing on potential changes regarding the risks of engaging with a new lending institution.

Possible Changes in Mortgage Terms

For borrowers, one of the significant risks associated with mortgage assignment is the potential for changes in the terms of their mortgage.

When a new lender takes over a mortgage, they might adjust the interest rates, payment schedules, or other terms to align with their lending policies. Such changes can sometimes be unfavorable to borrowers, increasing their financial burden.

Risks of Dealing with a New Lending Institution

Additionally, borrowers face risks related to the reputation and stability of the new lending institution. If the new lender has less favorable customer service or a weaker financial position, it could impact the borrower's experience and mortgage security.

Borrowers must thoroughly research the new lender and ensure they are comfortable with their practices and stability.

Considering Mortgage Assignment? Fetch Your Rate Today

As we conclude our discussion on mortgage assignment, it's clear that borrowers and lenders can benefit from this process when managed effectively.

Whether you're a lender looking to reorganize your portfolio or a borrower facing a change in the lender, understanding the terms and conditions of mortgage assignment is critical.

If you're contemplating a mortgage assignment, now is the time to contact Fetch arate and see how this option might work.

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• The Legally Invalid Assignment Defense to Foreclosure

People who are facing the possibility of a foreclosure on their home may want to investigate the history of their mortgage. If the assignment to the foreclosing party is not valid, this may be a viable defense to a foreclosure. In some states, you can demand that the foreclosing party produce a written assignment of the mortgage. If it does not have an assignment or failed to record it as required by state law, this may result in the dismissal of the foreclosure action. Recording rules may require that the foreclosing party record the assignment before starting the foreclosure.

Courts in other states are more lenient in their review of assignments. Since the mortgage is closely associated with the promissory note, the foreclosing party may be allowed to enforce the promissory note even if it cannot produce a valid assignment of the mortgage. You should seek legal guidance in your state to determine whether this defense may be viable.

Homeowners who believe that they may have a defense based on an invalid assignment may wish to consult with a knowledgeable foreclosure lawyer, since this defense can become complicated. Justia offers a lawyer directory to simplify researching, comparing, and contacting attorneys who fit your legal needs.

The Relationship Between Mortgages and Promissory Notes

The mortgage and the promissory note are the two key documents attached to a loan for buying a home. Some purchases involve a deed of trust rather than a mortgage, but they are functionally equivalent in this context. While the promissory note is your guarantee to repay the loan, the mortgage gives the lender the right to foreclose if you do not repay the loan as arranged. The mortgage also identifies the property that will serve as security for the loan. Thus, the two documents work together in establishing the lender’s rights.

The Role of Mortgage Assignments in Loan Transfers

A bank or other lender often will sell a mortgage to another party, which will collect payments and pursue the homeowner if they fail to keep up with the mortgage. To transfer the loan, the original lender will endorse the promissory note to the new owner of the mortgage. This is because collection efforts hinge on owning the promissory note. If the foreclosing party cannot produce the promissory note, the homeowner will have a defense to the foreclosure.

Meanwhile, the new owner will record the assignment of the mortgage. This includes transferring the right to foreclose, as provided by the mortgage, to the new owner. The assignment will provide the amount of the mortgage and the names of the homeowner, the original lender, and the new owner of the mortgage. It also will contain a description of the property attached to the mortgage and the date when the mortgage took effect.

An invalid assignment defense may only be a temporary solution until the new owner records an assignment in their name.

The mortgage industry uses a tool known as the Mortgage Electronic Registration System (MERS) to keep track of assignments. MERS may be a nominee for the lender, or it may receive the mortgage as an assignment. If MERS is the current assignee, it cannot pursue a foreclosure because it does not have an interest in the promissory note. MERS simply serves as an agent for the current owner of the mortgage and assists in creating a record for transfers of the mortgage. This allows banks to more easily transfer loans among them without creating a new assignment each time. You may have a defense against a foreclosure action if MERS is listed as the owner of the mortgage. However, this likely will be only a temporary solution until the new owner records an assignment in their name.

Last reviewed October 2023

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Mortgage Assignment Laws and Definition

(This may not be the same place you live)

  What is a Mortgage Assignment?

A mortgage is a legal agreement. Under this agreement, a bank or other lending institution provides a loan to an individual seeking to finance a home purchase. The lender is referred to as a creditor. The person who finances the home owes money to the bank, and is referred to as the debtor.

To make money, the bank charges interest on the loan. To ensure the debtor pays the loan, the bank takes a security interest in what the loan is financing — the home itself. If the buyer fails to pay the loan, the bank can take the property through a foreclosure proceeding.

There are two main documents involved in a mortgage agreement. The document setting the financial terms and conditions of repayment is known as the mortgage note. The bank is the owner of the note. The note is secured by the mortgage. This means if the debtor does not make payment on the note, the bank may foreclose on the home. 

The document describing the mortgaged property is called the mortgage agreement. In the mortgage agreement, the debtor agrees to make payments under the note, and agrees that if payment is not made, the bank may institute foreclosure proceedings and take the home as collateral .

An assignment of a mortgage refers to an assignment of the note and assignment of the mortgage agreement. Both the note and the mortgage can be assigned. To assign the note and mortgage is to transfer ownership of the note and mortgage. Once the note is assigned, the person to whom it is assigned, the assignee, can collect payment under the note. 

Assignment of the mortgage agreement occurs when the mortgagee (the bank or lender) transfers its rights under the agreement to another party. That party is referred to as the assignee, and receives the right to enforce the agreement’s terms against the assignor, or debtor (also called the “mortgagor”). 

What are the Requirements for Executing a Mortgage Assignment?

What are some of the benefits and drawbacks of mortgage assignments, are there any defenses to mortgage assignments, do i need to hire an attorney for help with a mortgage assignment.

For a mortgage to be validly assigned, the assignment document (the document formally assigning ownership from one person to another) must contain:

• The current assignor name.
• The name of the assignee.
• The current borrower or borrowers’ names. 
• A description of the mortgage, including date of execution of the mortgage agreement, the amount of the loan that remains, and a reference to where the mortgage was initially recorded. A mortgage is recorded in the office of a county clerk, in an index, typically bearing a volume or page number. The reference to where the mortgage was recorded should include the date of recording, volume, page number, and county of recording.
• A description of the property. The description must be a legal description that unambiguously and completely describes the boundaries of the property.

There are several types of assignments of mortgage. These include a corrective assignment of mortgage, a corporate assignment of mortgage, and a mers assignment of mortgage. A corrective assignment corrects or amends a defect or mistake in the original assignment. A corporate assignment is an assignment of the mortgage from one corporation to another. 

A mers assignment involves the Mortgage Electronic Registration System (MERS). Mortgages often designate MERS as a nominee (agent for) the lender. When the lender assigns a mortgage to MERS, MERS does not actually receive ownership of the note or mortgage agreement. Instead, MERS tracks the mortgage as the mortgage is assigned from bank to bank. 

An advantage of a mortgage assignment is that the assignment permits buyers interested in purchasing a home, to do so without having to obtain a loan from a financial institution. The buyer, through an assignment from the current homeowner, assumes the rights and responsibilities under the mortgage. 

A disadvantage of a mortgage assignment is the consequences of failing to record it. Under most state laws, an entity seeking to institute foreclosure proceedings must record the assignment before it can do so. If a mortgage is not recorded, the judge will dismiss the foreclosure proceeding. 

Failure to observe mortgage assignment procedure can be used as a defense by a homeowner in a foreclosure proceeding. Before a bank can institute a foreclosure proceeding, the bank must record the assignment of the note. The bank must also be in actual possession of the note. 

If the bank fails to “produce the note,” that is, cannot demonstrate that the note was assigned to it, the bank cannot demonstrate it owns the note. Therefore, it lacks legal standing to commence a foreclosure proceeding.

If you need help with preparing an assignment of mortgage, you should contact a mortgage lawyer . An experienced mortgage lawyer near you can assist you with preparing and recording the document.

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Assignment of loan | Practical Law

Assignment of loan

Practical law uk standard document 9-500-4767  (approx. 31 pages).

• Knowledge Base

What is an assignment of mortgage and how is it processed?

An Assignment of Mortgage is a process by which you can refinance your mortgage while saving money on mortgage taxes (this process is also known as a CEMA). We do allow assignments on existing credit union mortgages, however, we do not allow assignments on home equity products. The details, including associated fees, can be found below.

If you have a mortgage with another lender and are looking to refinance with the Credit Union under an assignment, you must first find out from the current lender if they allow assignments, any documentation they require, and all fees associated with the assignment. Once you are ready to move forward, you can apply with us . 　

Assignment of Mortgage Requirements

In order to process an Assignment of Mortgage, we will need the following documentation from you and/or your new lender:

• A commitment letter listing their address as they require it to read on the Assignment of Mortgage document.
• A copy of the mortgage schedule from the title search reflecting Jovia Financial Credit Union F/K/A Nassau Educators Federal Credit Union as lienholder on the subject property.
• A signed, authorization from all borrowers on the existing Jovia mortgage.

All documents can be e-mailed to the credit union at [email protected] or faxed to

(516) 714-2831, Attn: Loan Servicing.

We will begin processing your request once all documentation has been received. Please allow 7-10 business days for completion.

____________________________________________________________________________

All fees are due at closing.

*The closing attendance fee listed above is based on a closing in Nassau County. The fee may vary for closings outside of Nassau County.

The Credit Union’s attorney will bring the original Assignment of Mortgage to the closing.

To schedule attendance for your closing, please contact our attorneys, O’Reilly, Marsh & Corteselli P.C. directly at 516-741-1818.

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Mortgage Assignment Definition

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.

What Is Mortgage Assignment?

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.

How Does Assignment of Mortgage Take Place?

Effects of mortgage assignments.

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

Modification, effects on escrow payments, mortgage assignment example, frequently asked questions, who files the assignment of mortgage, what happens after mortgage assignment, why do lenders sell mortgages, what is assignment fraud, 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.

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Assignment Of Loan

Jump to section, what is an assignment of loan.

Under an assignment of loan, a lender (the assignor) assigns its rights relating to a loan agreement to a new lender (the assignee). Only the assignor's rights under the loan agreement are assigned. The assignor will still have to perform any obligations it has under the facility agreement.

The debtor, the recipient of the loan, must be notified when a debt is assigned. When there is an assignment of a loan, a Notice of Assignment (NOA) is sent out to the debtor informing them that a new party is now responsible for collecting any outstanding amount.

Assignment Of Loan Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.14 5 dex1014.htm ASSIGNMENT OF LOAN DOCUMENTS , Viewed October 21, 2021, View Source on SEC .

Who Helps With Assignment Of Loans?

Lawyers with backgrounds working on assignment of loans work with clients to help. Do you need help with an assignment of loan?

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Assignment Of Loan Lawyers

Lawrence S.

Lawrence A. “Larry” Saichek is an AV rated attorney and a CPA focusing on business and real estate transactions, corporate law and alternative dispute resolution. With a background including five years of public accounting and six years as “in house” counsel to a national real estate investment company, Larry brings a unique perspective to his clients – as attorney, accountant and businessman. Many clients think of Larry as their outside “in house” counsel and a valued member of their team. Larry is also a Florida Supreme Court Certified Mediator and a qualified arbitrator with over 25 years of ADR experience.

I enjoy helping businesses of all sizes succeed, from start-ups to existing small and medium sized businesses. I regularly advise corporate clients on a variety of legal issues including formation, day to day governance, reviewing and drafting business contracts and other agreements, business acquisitions and sales, as well as commercial and residential real estate issues, including sales, purchases and leases. As an attorney licensed in both Michigan and Florida, I also advise clients on real estate issues affecting businesses and individuals owning real property in either state, whether commercial, residential or vacation/investment property. I also regularly assist nonprofit organizations in obtaining and maintaining tax exempt status, and provide general legal counsel on all matters affecting public charities, private foundations and other nonprofit organizations.

Pura Rodriguez, JD, MBA is the President and Managing Partner of A Physician’s Firm, based in Miami. She represents healthcare providers from different specialties in a broad range of issues, including contract review, business planning and transactions, mergers and acquisitions, vendor and contract disputes, risk management, fraud and abuse compliance (Anti-Kickback Statute and Stark), HIPAA compliance, medical staff credentialing, employment law, and federal and state regulations. She also assists providers in planning their estates, protecting their assets, and work visa requirements.

With 19 years of experience in the area of estate planning, trademarks, copyrights and contracts, I am currently licensed in Florida and NJ. My expertise includes: counseling clients on intellectual property availability, use and registration; oversee all procedural details of registration and responses with the USPTO/US Copyright Office; negotiate, draft and review corporate contracts and licensing; counsel clients on personal protection, planning and drafting comprehensive estate plans.

Melissa Taylor, the President and founding partner of Maurer Taylor Law, specializes in business contract review and drafting and is a second-generation attorney with private firm, in-house counsel, governmental, entrepreneurial, and solo practitioner experience. Melissa has a strong legal background, a dedication to customer service, is friendly, warm and communicative, and is particularly skilled at explaining complex legal matters in a way that's easy to understand. Melissa personally handles all client matters from start to finish to ensure client satisfaction.

Entertainment Attorney with 30+ years of experience, representing all aspects of the TV, Film, Music and Publishing Industries

Aaron focuses his practice on entrepreneurs and emerging growth companies, providing general counsel services for companies from formation through exit. Aaron frequently advises clients in connection with routine and unique legal, business, and strategic decisions, including corporate, business and technology transactions, angel and venture financings, mergers and acquisitions, protection of intellectual property, and information privacy and data security.

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Understanding how assignments of mortgage work.

The bank or other mortgage lender that provides a borrower with the funds to purchase a home often later transfers or assigns its interest in the mortgage to another firm. When this happens, the borrower will start sending monthly mortgage payments to the new owner of the mortgage instead of the original lender. Some other things, such as the available modes of payment, many also change.  However, the general terms of the mortgage, such as the interest rate and payment amounts, will stay the same.

If you need help with a mortgage, consider finding a financial advisor to work with .

Mortgage Assignment Basics

Mortgages are assigned using a document called an assignment of mortgage. This legally transfers the original lender’s interest in the loan to the new company. After doing this, the original lender will no longer receive the payments of principal and interest. However, by assigning the loan the mortgage company will free up capital. This allows the original lender to make more loans and generate additional origination and other fees.

At closing, borrowers sign a document granting the original lender the right to assign the mortgage elsewhere. This means the original lender doesn’t have to ask for permission to assign the mortgage but can do so whenever it wants to. Often this occurs within a few months after the closing, but it can happen at any time during the term of a mortgage. Once a loan has been assigned, it can be assigned again.

The assignment of mortgage document uses several pieces of information to accurately identify the specific mortgage that is being transferred. These generally include:

The name of the borrower

The date of the mortgage

The jurisdiction where it was recorded

The amount of money that was originally loaned

A legal description of the home or other property used as collateral to secure the loan.

Although a lender doesn’t need to request the borrower’s permission before assigning a mortgage, the lender does have to notify the borrower after the mortgage has been assigned. This notice will generally provide the new lender’s name, contact information and mailing address or other information need to make payments.

Effects of Mortgage Assignment

When a mortgage is assigned, the original terms of the mortgage remain unchanged. The monthly principal and interest, interest rate and total number of payments required to pay the loan off will be the same as on the mortgage when it was signed at closing.

A company assigned a mortgage may have different methods of accepting monthly payments, such as online payments, paper checks or money orders. A borrower who wants more payment methods may be able to get a new mortgage holder to provide them upon request.

Some things may change, however. For instance, the new owner of the mortgage may have a different method of handling escrow payments that are used to pay property taxes and the premiums for hazard insurance. The law requires mortgage companies to charge no more than one-twelfth the annual cost of property taxes and insurance each month. However, they can also require borrowers to maintain a cushion of up to one-sixth the annual total required to pay taxes and insurance. If a new mortgage company has a different policy on this cushion, it could change the total monthly payment.

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The borrower also does not need to notify the local taxing authorities or the hazard insurance provider about the assignment. The new holder of the mortgage is required to handle these notifications.

Borrowers should check the information about where payments are supposed to go. This need to be accurate so payments will be directed correctly to the holder of the mortgage and the borrower will receive credit for them.

Another important matter that may change when a loan is assigned is the procedure the mortgage company will follow in the event of default. Borrowers should make themselves familiar with the notification methods used by the new mortgage to let them know if payments are not being received and foreclosure is in the offing.

The Bottom Line

Home mortgages are often assigned by their original lenders to other companies. Assignment usually doesn’t change much for the borrower, except that the payments will go to a different address. The original loan amount, interest payment, term and monthly principal and interest part of the payment will stay the same. Assigning mortgages frees up money for the lenders to make more loans. Borrowers don’t have to be told a mortgage will be assigned, since they agree to this at closing. However, they must be notified after an assignment and told how to contact the new mortgage holder.

Mortgage Tips

A financial advisor can help you evaluate home buying and other important financial moves. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now .

Borrowers can find out whether and where their mortgage has been assigned through the Mortgage Electronic Registration Systems (MERS). This is an organization created by mortgage companies to track mortgage assignments. Borrowers can use a free online service provided by MERS to find out who owns their mortgage.

Mortgage rates are more volatile than they have been in a long time. Check out SmartAsset’s mortgage rates table to get a better idea of what the market looks like right now.

Photo credit: ©iStock.com/ArLawKa AungTun, ©iStock.com/ridvan_celik, ©iStock.com/damircudic

The post Understanding How Assignments of Mortgage Work appeared first on SmartAsset Blog .

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If you switch lenders, can you just change the name on the appraisal?

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Home » Appraisals » If you switch lenders, can you just change the name on the appraisal?

One of the things we hear a lot from borrowers and sometimes lenders is – The borrower switched lenders, and we need the appraiser to change the lender name. Can the appraiser just switch it without having to do a new assignment?

The answer is no – this is a USPAP. USPAP requires a new assignment if the lender/client changes. If the appraiser simply switches the lender name, they are in violation of USPAP and putting their appraisal license at risk. In order to comply with USPAP, there must be a new assignment ordered by the new lender/client.

Borrowers sometimes ask: I’m the one that paid for this appraisal – can’t you just give me a copy of it?” But again, this is a USPAP issue. USPAP mandates that the appraiser must not disclose confi dential information or assignment results to anyone other than the client or those specifi cally authorized by the client. Without consent from the lender, neither the appraiser nor the AMC can provide the report to the borrower or discuss it with them.

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FAQ #6: Can An Appraisal Be Readdressed To A New Client?

• February 9, 2023

Ryan Bays, SRA, AI-RRS

Realtors, remember the last time your buyer switched lenders at the last minute?  I bet you were hoping you could just use the old appraisal, right?  Lenders, how many times have you reached out to the appraiser and asked them to change the name on their appraisal from the original lender to the new?

This FAQ impacts lenders, homeowners, and Realtors, and there’s much confusion from all parties, so I hope to give some clarity on the question:

Can an appraisal be readdressed to a new client?

To answer this question, let’s consider the following example:

The home at 1416 Maple Drive was for sale.  Mr. & Mrs. Smith wanted to buy the home, and began working with their lender, All-American Mortgage Company.  All-American Mortgage hired an appraiser to complete an appraisal report for the purchase of the home, and the appraisal was completed and delivered to the mortgage company a couple of weeks later.  Just a few days after, Mr. & Mrs. Smith decided they wanted to switch lenders.  Eagle Mortgage was offering a ¼ point lower on the interest rate, and $1,000 less in closing costs!  What a deal!  So they went through the process again with Eagle Mortgage and the processor at the new mortgage company called up the original appraiser.

The phone call went something like this, “Hi Mr. Appraiser, I’m with Eagle Mortgage Company, and we’re the new lender for Mr. & Mrs. Smith, who are purchasing the home at 1416 Maple Drive.  You just did an appraisal on it a few weeks ago for another lender, and we just need you to change the name on the appraisal report and email it right back to us.  Thanks!”

Now, much to the surprise of lenders, homeowners, and Realtors alike, the answer to our FAQ is “no”.  And I’ll tell you why next.

Per USPAP, appraisals cannot be readdressed to another party.

The Uniform Standard of Professional Appraisal Practice (USPAP) states that once a report has been prepared for a named client(s) and any other identified intended users and for an identified intended use, the appraiser cannot “readdress” (transfer) the report to another party.

So if an appraiser can’t readdress a report, how can we still meet our client’s needs?  USPAP says the answer is with a new assignment.  As an appraiser, I can begin a new relationship with Eagle Mortgage Company and appraise the property for them.  With a new report as part of a new assignment, their name is on the report, and everything is just the way they need it.

It’s important to keep in mind that I have to be careful in my new appraisal not to disclose any information previously deemed confidential, unless I have the first client’s permission.

“So are you saying you have to complete an entirely new, full appraisal with another inspection”?  This is usually the first question asked after explaining this process.

Again, the answer is “no.”  Or at least “not always.”

According to an article by The Appraisal Institute, “In many such cases there may be little additional work in performing a new assignment for another client. Perhaps when all is said and done you will be providing virtually the same data and analysis, and even the same value conclusion…”

So what’s an appraiser…and a lender…and a Realtor…and a homeowner to do?

Let’s try & land this plane, shall we?  If you’re a lender, what are your options? How can you get this deal closed for your buyer or homeowner?  It’s going to come down to a conversation between you and the appraiser.  The two of you need to talk with each other and determine who the client is, the intended user, intended use, date of value, scope of work, etc.  It may be that the home was just appraised two weeks ago.  The new lender is fine with the comparable sales and analyses, and everything else in the original report.  And, they are also fine with the date of value from two weeks ago.  They don’t need a new inspection, so they simply work out an agreement for a new assignment that does not involve a re-inspection of the property.

The cost here is usually up to the appraiser, but likely will be minimal as long as there is only minimal work to be done.  In our experience homeowners who change lenders do so very soon after the original appraisal was completed.  Therefore, it’s not likely that much has changed in the market or with the property.  And most of our clients are 100% ok with us simply working up a new assignment, relying on the original date of value, and naming them as the client.  We do charge a fee for this, as we’re still doing all of our analyses we would usually do.  But this helps our clients get their name on the report, and gets the homeowners to the closing table with little additional money out of their pockets.

If the new lender does want the appraiser to re-visit the property, the fee will be higher, but usually we try to give a little discount, especially if we had just been to the property.  Again, communication between the lender and appraiser is key.

If you have a question you’d like us to feature, email me at [email protected]

For more information on this and other topics related to the appraisal process, check out our Guide To Appraisals set of E-Books at https://riverfrontappraisals.com/guides/ .

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Readdressing, Reassigning, Reappraising

Faqs for ethically handling requests.

You’ve likely already come across this situation during your practice:

You've completed an assignment for a client some time back – maybe a year ago, a month ago, a week ago – and now another party wants your opinion of the value of the same property.

The request may be to readdress the report you prepared for the previous client, or to recertify or reassign it. Other times, the request might be for you to provide an update, or a letter update. Sometimes, the requesting party has no knowledge of the previously prepared report.  How should you move forward?

First, make sure you understand what’s being requested. The requesting party might not know what he or she needs, or might use labels or terms like recertification without understanding what they mean. Once you’re clear on the request, the following Q&As might help you form a response.

Assignment results are your opinions and conclusions developed specific to an assignment. Examples include your final value opinion, your highest and best use conclusion, and your indications of value from any of the approaches used. The Confidentiality Section of the Ethics Rule of USPAP and the Appraisal Institute Code of Professional Ethics provide that an appraiser must not disclose confidential information or assignment results to anyone other than the client and persons specifically authorized by the client; state enforcement agencies and such third parties as may be authorized by due process of law; and duly authorized professional peer review committees. Assignments results may be presented in a written report or in an oral report. Sometimes, if an appraiser is not careful, assignment results are revealed inadvertently. For example, an appraiser who in casual conversation tells another appraiser, another client or anyone else, “I appraised that property for $1,000,000,” is divulging assignment results.

First, keep in mind that not all portions of the report are confidential. For example, in an appraisal report, factual data such as sales comparables are not confidential (unless they were made available by the client and are not available from another source). Descriptions of the location (neighborhood description, region description, etc.) are not confidential. However, since an appraisal report contains assignment results, which are included in the Confidentiality Section of the Ethics Rule of USPAP and the Appraisal Institute Code of Professional Ethics, the authorization process stated above in Q1 applies. This means that a copy of the report that shows confidential information and assignment results can’t be given to, revealed to, or shared with anyone other than the client and persons specifically authorized by the client; state enforcement agencies; duly authorized professional peer review committees; and such third parties as may be authorized by due process of law.

Yes; however, you cannot disclose any confidential information contained in the report prepared in the previous assignment for a different client without that prior client's permission. So you must ask yourself: In completing a new assignment involving the same property for a second client, would I need to disclose information that was considered to be confidential by the first client? If so, you can’t take on the assignment without obtaining prior permission of the first client to release that confidential information. And if the first client will not give permission to use their confidential information, then you can’t accept the new assignment. In many cases, performing a new assignment for a second client would not require the appraiser to divulge any confidential information. Revisit USPAP’s definition of confidential information to be sure. Confidential Information is information that is either:

• Identified by the client as confidential when providing it to an appraiser and that is not available from any other source.
• Classified as confidential or private by applicable law or regulation.

A common misconception is that you must be “released” by the first client to accept the assignment with a subsequent client. The only “release” required is about confidential information. The first client does not need to give permission for you to proceed with another assignment for a second client unless confidential information is at stake. Another common misconception in performing valuation assignments is that if the value opinion in the second assignment is the same as the value opinion in the first assignment, then communicating the value opinion in the second assignment breaches confidentiality with the first client. This is not true. USPAP’s definition of assignment results is “an appraiser’s opinions or conclusions, not limited to value, that were when performing an appraisal assignment, an appraisal review assignment, or a valuation service other than an appraisal or appraisal review.” By definition, the assignment results are different because there are two different assignments – even if the numbers are the same. Note the difference between saying to Client B, “I appraised this same property for Client A for $500,000” and “My value conclusion [in the context of this assignment for you, Client B] is $500,000.” The first statement breaches confidentiality by divulging assignment results. The second statement does not. Another common misconception is that taking a subsequent assignment with another client would be a “conflict of interest.” You can’t have a conflict of interest unless you first have interest. Entering into an appraiser-client relationship to complete an assignment does not mean that you then have an interest with regard to that client or that property. This would be inconsistent with the underlying principle in USPAP that the appraiser’s role is to be independent, impartial, objective, and unbiased. Keep in mind that since 2010, USPAP has required disclosure of any prior service involving the same property within three years prior to the date of engagement. A few key points about this requirement:

• The requirement is to disclose any service involving the property that is the subject of the appraisal (or subject of the appraisal under review, in the case of a review assignment), not just appraisals or appraisal reviews, and not just services provided as an appraiser.
• The relevant time period is three years prior to the date of engagement of the current assignment, not date of value or date of report.
• The disclosure must be made up front before accepting the assignment and again in the certification in the appraisal or review report.
• There is no requirement to disclose for whom the prior service was performed; the appraised value, if any; or exactly when during the three-year period the service was performed.

The certification statement required by USPAP in Standards Rule 2-3 supplies the type and degree of disclosure: “I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.” The requirement that was added to USPAP in 2010 clarifies that if the client requests that the appraisal be kept confidential, the appraiser cannot take another assignment involving that property for three years. That’s because the appraiser would not be able to disclose prior services (as required) without violating confidentiality. Use your discretion in deciding whether or not to reveal information about a prior assignment to a subsequent client beyond what’s required. For example, while the identity of the client is not confidential (unless they state that it is), there are situations in which the fact that the first client had the property appraised is, in itself, sensitive information. It’s also worth noting that it’s characteristic of professionals in many other fields to keep the identity of prior clients confidential. One caveat about taking on assignments with residential property owners/borrowers: If you’re contacted by a residential property owner or borrower about providing valuation services for which the intended use is in conjunction with mortgage lending, you must advise the property owner or borrower that the lending institution, or a third party engaged by the lender, needs to engage the appraiser for that type of assignment. This is a requirement under federal law, and the regulatory agencies have been adamant about it. Further, an appraisal report prepared for a client who is a residential property owner or borrower should clearly state that it is not intended for use by a federally insured depository institution in a federally related transaction.

No. It’s improper to readdress a report to another client for three significant reasons.

• Changing the name of the client and then forwarding the “readdressed” report to the second client does not change the first appraiser-client relationship. An appraiser-client relationship, once established, cannot be changed. Typically, the second party wants to be named as “client” because they want the appraiser-client relationship, and all the rights and obligations thereof, to be between them and the appraiser. The only way to accomplish this is for a new appraiser-client relationship to be established. A written engagement letter with the client is a great way to establish this. In short, the only way to be named as “client” in the report is to actually be a client. “Client” is defined in USPAP as “the party or parties (i.e. individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directly or through an agent”.  
• Changing the name of the client and then forwarding the “readdressed” report to the second client could harm the confidential nature of the appraiser’s relationship with the first client. While this could be avoided by obtaining the first client’s permission to provide the report to the second client, it could still be misleading. In an appraisal assignment, if the appraiser simply changes the name of the client, the appraiser is not following the requirements under Standard 1 of USPAP to identify the client, intended user(s) and intended use with regard to this second client in the proper sequence. According to the definitions of intended use and intended user, both must be identified by the appraiser “at the time of the assignment”, not after the appraisal process is completed and the report is finished.  
• The client is the party to whom the appraiser owes the duty of confidentiality. (Note that the appraiser does not owe a duty of confidentiality to other intended users.) And the key reason for identifying intended users has to do with Standards Rule 2-1(b), which says that the report must contain sufficient information to enable the intended users of the appraisal to understand the report properly. (In the case of a review report, a similar requirement is found in Standards Rule 3-4(b).) Once intended users and intended use are stated, the appraiser is now obligated to ensure the adequacy of the report for that use by those intended users. The identification of intended users (and intended use) must be completed up front before scope of work determination and before the report is issued. To add intended users after the fact, or to change the intended use, is putting the cart before the horse. It simply doesn’t work.

A request to readdress a report should be treated as a request to accept a new assignment involving the same property, as in Q3 above. Once the confidentiality issue is resolved, the next questions to be answered are:

• Who are the intended users?
• What is the intended use?
• What date of value is needed, according to what value definition?
• What assignment conditions (extraordinary assumptions, hypothetical conditions, supplemental standards) apply?
• What is the appropriate scope of work for this new assignment?
• What level of reporting is needed?

There may be little additional work in performing a new assignment for another client. You may be providing virtually the same data and analysis, and even the same value conclusion (though you won’t discover this until you have completed your analysis). However, you must consider all the assignment parameters for this new assignment, which could be different from those of the previous assignment. Further, keep in mind that in providing a report to another client, you are extending your liability to that client. As appraisers, we are not in the business of “selling reports”; we are in the business of “selling” our expertise and our opinions. Every time an addition is made to the list of intended users, our liability grows. A new client means there is a new assignment which necessitates the preparation of a new report . One additional point regarding assignments for lenders: Appraisers should be aware that the appraisal requirements of Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) allow a regulated lender to use a report that was prepared for another “financial services institution”. This means that Lender B can use a report that was prepared for Lender A, even though Lender A shows as client on the report. Lender B does not have to be named as client, according to the FIRREA requirements. However, usually Lender B will “want their name on the report”. Why? Because Lender B wants the appraiser-client relationship, and all the rights and obligations thereof, to be between them and the appraiser. This means that as far as the appraiser is concerned, there is to be a new appraiser-client relationship – i.e., a new assignment.

Reassigning may mean different things to different parties. Be sure you know what the requesting party is asking. In the context of this discussion, reassigning means signing over your rights and obligations regarding the report to another party. For example, when a report is prepared for and given to Client A, that report is no longer yours to “give”, or assign, to anyone else. An analogy would be if you sold your car to Party A, you couldn’t then sell it to Party B. Client A could assign their interests in their report to Client B, but the appraiser would not be part of this process (and should not be asked to be).

When the request is to recertify, clarification with the client is imperative. “Recertify” tends to be an abused term. Often, it is erroneously used to mean “reassign”, or “readdress”, or “update”. Often it is not clear what clients mean when they use the term “recertify”, and appraisers need to help remedy the confusion. Appraisers certify their reports (i.e., they may include a certification per SR 2-3 in an appraisal report), but this certification has nothing to do with the ownership of, or rights to use, the report. A “recertification of value” is an entirely different concept. As defined in Advisory Opinion 3 of USPAP, a re-certification of value is an assignment in which the appraiser determines whether the conditions of an appraisal have been met. This sort of assignment is not an appraisal at all, because it has nothing to do with developing an opinion of value.

No. The letter would add that party as an intended user after the completion of an assignment, and you cannot do that.

Takeaways for Future Assignments

Requests for valuation services are presented to appraisers in an assortment of ways, and the appraiser’s first tasks are to:

• Ascertain exactly what the party is requesting.
• Determine whether what the party is requesting is appropriate given their intended use.

When a new client enters the picture and a new appraiser-client relationship is formed, a new assignment is involved. This new assignment will require the appraiser to reconsider or reanalyze the process outlined in USPAP’s Standard 1, especially regarding identification of intended use and scope of work. A new report will be provided, appropriately identifying the party who engaged the appraiser the second time as the client. If the client is a lender subject to the requirements of FIRREA, the report will disclose prior assignments involving the same property. In a reappraisal situation, the work involved in developing the value opinion and preparing the report will likely be far less than it was the first time around. The new report may look very similar to the first. The value conclusion might even be the same, but much has changed. The appraiser has considered all parameters for a new assignment to meet the needs of the new client given their intended use, including scope of work, selection of report option, type and definition of value, date of value, etc. The appraiser has agreed to extend his or her liability to this new client. Once a report is provided to a client, it cannot be tampered with. Changing the name of the client (readdressing) is misleading because it falsifies the true relationship between the appraiser and the party who engaged the appraiser in that particular assignment. It’s unethical for clients to request this, and for appraisers to comply with such requests. Note: The Appraisal Standards Board of the Appraisal Foundation has provided additional guidance on these topics. See Advisory Opinion 25, Clarification of the Client in a Federally Related Transaction; Advisory Opinion 26, Readdressing (Transferring) a Report to Another Party; and Advisory Opinion 27, Appraising the Same Property for a New Client. Also see FAQ #120 which deals with “reliance letters.” These Advisory Opinions and FAQ are published with the Uniform Standards of Professional Appraisal Practice (USPAP) . February 2014

New Appraisal Assignment?

by IDFPR Board · Published December 22, 2011 · Updated March 21, 2024

A week later the lender wants the appraiser to amend the appraisal to reflect the renegotiated contract that pegs the property at $180,000.

As an aside, the lender would not provide the new contract.

First, is the lender’s request automatically a new appraisal assignment?

AO-3 offers useful guidance:

Regardless of the nomenclature used, when a client seeks a more current value or analysis of a property that was the subject of a prior assignment, this is not an extension of that prior assignment that was already completed – it is simply a new appraisal assignment .

Let’s take this one step further by examining AO-111 :

Question: I recently had a client contact me and ask me to change the effective date of my appraisal, to make it one week after the effective date shown in my report. Does USPAP permit me to simply change the effective date without taking additional steps?

Response: No. As indicated in the SCOPE OF WORK RULE, the effective date of the appraiser’s opinions and conclusions is an assignment element.

If the client is asking for an appraisal with a different effective date, the appraiser needs to determine the appropriate scope of work to produce credible assignment results for this request. Such a request would need to be considered a new appraisal assignment , but that does not necessarily require starting from scratch. As with all new assignments, the appraiser must decide the appropriate scope of work to produce credible assignment results. This would include a decision as to whether or not it was necessary to perform another inspection, as well as the extent of any additional research and analyses that might be required. The scope of work for the new assignment can be different from the scope of work completed in the earlier assignment. As with any assignment, the appraiser might be able to use information and analyses developed for a previous assignment.

AO-112 follows up with:

Question: I recently completed an appraisal for mortgage financing purposes in a purchase transaction and delivered the report to my client. My opinion of value did not support the pending sale price. As a result, the purchase transaction was not consummated. However, one week later the buyer and seller entered into a new purchase agreement where the sale price coincided with my appraised value. My client asked if I can provide a revised report that includes the analysis of the newly agreed-upon sale price. To provide a revised appraisal report, must I consider the client’s request as a new appraisal assignment?

Response: If the client does not require a more current effective date, USPAP would not mandate treating the request as a new assignment. However, if the client does require a more current effective date, the request must be treated as a new assignment.

In this example, regardless of whether the effective date is changed, the date of the report would have to change to accurately reflect the appraiser’s consideration of the newly obtained agreement of sale. Because the new purchase agreement was obtained after the date of the first report, the revised report would need to have a date of report that is the same as or later than the date the new purchase agreement was obtained by the appraiser.

I n addition, the new report would also need to reflect the appraiser’s analysis of the prior agreement of sale. In the development of an appraisal, an appraiser is required under Standards Rule 1-1(b), to not commit a substantial error of omission or commission that significantly affects an appraisal. Since information about the prior agreement of sale is known by the appraiser and that information is relevant to the appraisal problem, it must be considered.

Even if the new contract isn’t made available you can complete the assignment so long as you detail what steps were taken to obtain it.

Now that you understand that it’s a new assignment, should the appraiser charge the lender for a whole new assignment?

This is purely a business decision. New assignments do not necessarily translate into new invoices. But, they aren’t baked-in freebies either.

As a business person this is totally the appraiser’s call.

~ Source Illinois Appraiser Newsletters December 2011 issue

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Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois. promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.

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Loan Participation Vs Assignment

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Sub-participation

Sub-participation is a form of loan participation in which a lender shares its risk with a second party. This type of loan participation does not change the documentation of the loan. This type of loan participation can also include future amounts for loans that have not yet been fully disbursed, such as a revolving credit facility.

The legality of sub-participation is dependent on the conditions of the loan agreement. In general, a loan participant cannot enforce the loan or proceed against the collateral on their own. Furthermore, the borrower may not even be aware that the loan participant is involved. However, the seller of the participation retains the right to enforce or compromise the loan, as well as to amend it without the consent of the participant.

As for drafting sub-participation agreements, there are many ways to do so. But it is important to include at least the following provisions: The term of the agreement, the rate of interest, and the repurchase provisions. These provisions should be included in the sub-participation or assignment agreement.

Assignment and sub-participation are standard terms in inter-bank transactions. We will examine the purposes of the loan participation and assignment agreements, as well as the terms of the transaction. While they are essentially interchangeable, they are fundamentally different.

Loan participation and assignment are both ways to transfer ownership of a loan. Assigning a loan to a third party or sub-assigning it to yourself is a common way to transfer the loan.

The terms “loan participation” and “assignment” are often used in the banking industry. Both terms refer to the transfer of a loan’s rights and payments between two financial institutions. We’ll look at what each term means and how they differ from each other.

Loan participation has long been a common form of loan transfer. Its advantages over other loan transfer methods include the ability to diversify a portfolio and limit risk. It also eliminates the need for loan servicing. However, this option can be problematic when it differs from underlying loans. For this reason, it’s important to structure loan participation carefully.

Whether a loan is a participation or an assignment depends on a variety of factors. The percentage of loan ownership, relationship with the other financial institution, and confidence in the other party are all important considerations. However, the basic difference between participation and assignment is that the former involves the original lender continuing to manage the loan while the latter takes on the responsibility of doing so.

As a rule, loan participation is a good option if the original lender does not want to keep the title of the loan. It allows the borrower to avoid the costs associated with the loan and is more attractive for borrowers. In addition, loan participation arrangements can be more flexible than outright assignments. However, it’s important to make sure that the arrangement you enter into is formal. This will prevent any confusion or conflict down the road.

Syndication

Understanding the differences between loan participation and syndication is important for lenders. Understanding these two options can help them find the best solutions for their lending needs. Syndication is a common type of lending program where lenders pool their loans together to reduce the risks of defaults. Loan participation programs can be more complex and require due diligence to be effective.

Syndicated lending allows lenders to access the expertise and business relationships of their fellow lenders while maximizing their exposure to deal flow. However, lenders who join a syndicated lending arrangement often give up some of their independence and flexibility to take unilateral action. In addition, these arrangements often involve the involvement of legal counsel, which can also be important.

A loan participation arrangement is a group of lenders coming together to fund a large loan. A lead bank underwrites the loan and sells portions of it to other financial institutions. Loan syndication, on the other hand, is an arrangement whereby multiple financial institutions pool their money together and make one large loan. In this type of arrangement, the original lender transfers the rights and obligations to the purchasing financial institution. The risk is then shared among the participating lenders, allowing them to share in the interest and the risks of the loan’s default.

A syndication contract can be structured in as many tranches as necessary to meet the borrowing needs of a customer. The underlying contract will contain a commitment contract that specifies the ratio of participation among the participants. Each tranche will have a borrower, which will be a common participant or may be different. The contract will require that each participant fulfill their commitments before the scheduled due dates.

Loan participation and assignment are standard transactions between banks. They are similar in some respects but have different purposes. 

There are many types of loan participation agreements. Some involve a full assignment, while others are a sub-participation. If you are involved in loan participation or assignment, you need to understand which type of agreement applies to your situation. There are several types of loan participation agreements, including sub-participation agreements, undisclosed agencies, and assignments.

Sub-participation agreements are typically used to assign part of the loan amount to a new lender, and the loan documentation remains unchanged. In addition, these types of agreements include future amounts, which may be provided as part of a revolving credit facility or a portion of a loan that hasn’t been fully disbursed.

Loan participation is a popular option for lenders to limit their exposure to borrowers. Lenders may sell a portion of the loan to an investor or sell a portion of their interest to another party. While the transfer of a loan portion does not always require the consent of the transferor, lenders must consider participating interest guidelines and the applicable rules.

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Sacramento Appraisal Blog

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Do you need to order a new appraisal when an FHA case number transfers to a new lender?

April 12, 2010 By Ryan Lundquist 9 Comments

Here is all you ever wanted to know – verbatim from FHA/HUD:

FAQ : When a case number is transferred with a completed appraisal, may a new appraisal be requested?

Solution Details : When a borrower has switched lenders, the 1st lender must transfer the case to the 2nd lender upon borrower request . FHA does not require that the client name on the appraisal be changed when it is transferred to another lender.

In accordance with USPAP, the lender is not permitted to request that the appraiser change the name of the client within the appraisal report unless it is a new appraisal assignment. The appraiser cannot ‘readdress’ (transfer) the original appraisal report to another party and must perform a new appraisal assignment in compliance with Advisory Opinion #26 and FAQ # 74 in the 2008-2009 edition of USPAP.

For cases assigned on or after January 1, 2010, a 2nd appraisal may be ordered by the 2nd lender when: 1. The 1st appraisal contains material deficiencies determined by the DE underwriter for the 2nd lender. 2. The appraiser performing the 1st appraisal is on the 2nd lender’s exclusionary list. 3. Failure of the 1st lender to provide a copy of the appraisal to the 2nd lender in a timely manner would cause a delay in closing, posing potential harm to the borrower. Potential harm includes events outside of the control of the borrower such as loss of interest rate lock, purchase contract deadline, foreclosure proceedings, and late fees.

For cases in 1 and 2 above, copies of both appraisals must be retained in the case binder. For cases in 3 above, the 1st appraisal must be added to the case binder when it is received.  In all cases, the lender must document why a 2nd appraisal was ordered and retain the explanation in the case binder.

FHA prohibits appraiser shopping where lenders order additional appraisals in an effort to assure the highest possible value for the property and/or the least amount of deficiencies and/or repairs are noted and required by the appraiser.

I hope this was helpful. If you have any questions, feel free to call me at 916-595-3735 or email [email protected] .

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Reader Interactions

April 13, 2010 at 5:21 PM

Ryan, I had this situation come up a while back, and at the time did not know the correct answer. I found out however what you just said. I’m sure a lot of people will find this information very useful since it does seem confusing.

April 13, 2010 at 6:01 PM

Thanks Tom. I find HUD to be very easy to talk with to when situations arise. There are so many different factors in the housing market and some very out-of-the-ordinary property conditions too that warrant a call into their office.

April 16, 2010 at 1:29 AM

You are right, there is a lot of confusion in the marketplace. This is great info, thanks for posting it Ryan!

March 30, 2017 at 12:40 PM

What happens if this situation occurs but the borrower is not going to another lender and the case number is being transferred because its a completely different borrower & lender? Is the new lender required to use the existing appraisal when its a new borrower? Thanks.

March 30, 2017 at 12:47 PM

Hi David. Thanks so much for the question. Honestly, I would defer to an experienced loan officer for the best answer. My expertise is with appraisals and I’m not really sure on the loan side of things since I am not on that side. I would recommend touching base with a local loan officer. If you are in the Sacramento area I am happy to connect you with someone. Sorry I couldn’t be more help.

September 8, 2019 at 5:18 PM

Im currantly working with a different lender cause i switched in between and my FHA case # has been released in there name along with the appraisal complete . Im in U/W now but before while waiting for other lender to realse fha case # got email for appraisal to upload bank information . But then they got the realse . So do i still have to pay again??

September 8, 2019 at 8:55 PM

Thanks so much for the question. Honestly, I’m not entirely sure. I think this is where you might consider asking your loan officer about their procedures and this process. I would think you shouldn’t be paying because the entire concept is the appraisal sticks with the Borrower. I suppose if the new lender starts asking the original appraiser to do more work, clarify things, or put the appraisal in the name of the new lender, then it would be reasonable for extra fees. If the new lender charges you for an appraisal though and there has not actually been any new work done, I would definitely ask them about this to be sure you aren’t paying for something you shouldn’t be.

September 9, 2019 at 3:36 AM

I just didnt know since we went to U/W same day as our appraisal and FHA case # got realised that day as well to them . But it still shows old lender on the appraisal but case # is the new lenders name. Our email we got said congratulations you have been summited to U/W and that has been a week ago and still nothing back yet.

September 9, 2019 at 8:10 AM

I understand. Well, I hope you get some clarity and that things go smoothly. Best wishes.

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Apartments Could Be the Next Real Estate Business to Struggle

Owners of some rental buildings are starting to struggle because of rising interest rates and waning demand in some once booming Sun Belt cities.

By Joe Rennison and Julie Creswell

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China's June new yuan loans seen surging on supportive policy: Reuters poll

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• June new loans seen at 2.25 trln yuan vs 950 bln yuan in May
• June M2 growth seen at 6.8% y/y vs 7.0% y/y in May
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Polling by Devayani Sathyan and Rahul Trivedi; Reporting by Ellen Zhang, Kevin Yao and Winni Zhou; Editing by Kim Coghill

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Approval of Brazil's President Luiz Inacio Lula da Silva went up in July to the highest level in 2024, a poll showed on Wednesday, with most respondents having favorable views on his criticism of the central bank's interest rate policy.