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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.

Assignment refers to the transfer of some or all property rights and obligations associated with an asset, property, contract, etc. to another entity through a written agreement. For example, a payee assigns rights for collecting note payments to a bank.

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.

The most common example of an Assignment of Mortgage is when a mortgage lender transfers/sells the mortgage to another lender. This can be done more than once until the balance is paid. The lender does not have to inform the borrower that the mortgage is being assigned to another party.

A typical assignment amounts to the transfer of the rights of the lender (assignor) under the loan documentation to another lender (assignee), whereby the assignee takes on the assignor's rights, such as the right to receive payment of principal and interest on the loan.

The most common example of an Assignment of Mortgage is when a mortgage lender transfers/sells the mortgage to another lender. This can be done more than once until the balance is paid. The lender does not have to inform the borrower that the mortgage is being assigned to another party.