📄 What Is an Assignment of Mortgage in Real Estate?

An Assignment of Mortgage is a legal document that transfers a lender’s rights in a mortgage loan to another lender or entity. It does not change the borrower’s obligations. Instead, it simply assigns ownership of the loan from one party (the original lender) to another.

How an Assignment of Mortgage Works

An assignment occurs when a lender sells or transfers the mortgage to another lender or investor. This is extremely common in modern lending — banks frequently sell loans after closing, often to free up capital or as part of secondary market operations (like selling to Fannie Mae or Freddie Mac).

The assignment transfers:

  • The right to collect mortgage payments
  • The right to enforce the mortgage terms
  • The right to foreclose (if ever necessary)
  • The legal interest in the mortgage lien recorded at closing

The borrower normally receives a “goodbye letter” from the old lender and a “welcome letter” from the new one, confirming payment instructions.

Why Assignments of Mortgage Matter

For Borrowers:

  • Your loan terms do NOT change — interest rate, payment, and balance stay the same.
  • You must update your payment information when the lender changes.
  • Misunderstanding transfers can lead to late payments if notices are missed.

For Lenders:

  • Allows them to sell loans on the secondary market.
  • Helps free up capital for issuing new mortgages.
  • Ensures the chain of title is documented properly.

Example of an Assignment of Mortgage

Suppose a borrower takes out a mortgage with Lender A. Shortly after closing, Lender A sells the loan to Lender B. To complete the transfer:

  • Lender A executes an Assignment of Mortgage to Lender B.
  • The assignment is recorded in county land records.
  • The borrower receives notice that future payments must be sent to Lender B.

The borrower’s loan terms remain exactly the same — only the servicing and ownership change.

Why Assignments Matter for FSBO Sellers

  • Title companies verify the chain of mortgage assignments before closing.
  • Incorrect or missing assignments can delay closing if loan ownership is unclear.
  • Assignments help ensure payoffs are accurate and sent to the correct lender.
  • If the seller has refinanced or their loan was sold multiple times, assignments must be in order.