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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.

Assignments are generally freely permitted in most modern mortgage agreements. Once the borrower has received proper notice of the assignment, payments will be made to the new creditor. A mortgage assumption occurs when a buyer agrees to take on the seller's current loan and mortgage obligations.

The purpose of the mortgage or deed of trust is to provide security for the loan that's evidenced by a promissory note. Loan Transfers. Banks often sell and buy mortgages from each other. An "assignment" is the document that is the legal record of this transfer from one mortgagee to another.

Both the Courts and several years of case law hold that the actual mortgage is a nullity. It is the note that controls the ownership of the loan, and by operation of fiction, whoever holds the note will hold an equity right to foreclosure irrespective of who holds or has the mortgage.

Cons On An Assumable Mortgage Upfront costs still significant: Given the combination of your purchase price and assumption fees, your initial investment might be a large number. If you don't have that much cash, you'll have to take a second mortgage at current rate to cover the shortfall.

Pros. Lower interest rates. Since mortgage rates have recently skyrocketed, assumption offers a rare chance to access lower rates as a buyer ? or, if you're the seller, significantly boost buyer interest in your house. Lower closing costs.