Recordation of assignments of mortgage: Overview, definition, and example
What is recordation of assignments of mortgage?
Recordation of assignments of mortgage refers to the formal process of filing an official record of the transfer of a mortgage from one party (the assignor) to another (the assignee) with a government authority, typically at the county or local registry office. This process ensures that the new holder of the mortgage rights is legally recognized and has priority over other claims to the property. It also provides public notice of the assignment, allowing interested parties, such as lenders or potential buyers, to determine the current holder of the mortgage.
Why is recordation of assignments of mortgage important?
The recordation of assignments of mortgage is important because it establishes the legal chain of ownership for the mortgage loan. Without proper recordation, there may be confusion or disputes over who holds the right to enforce the mortgage, collect payments, or initiate foreclosure proceedings in the event of default. Recording the assignment ensures that the assignee has legally recognized rights, protecting them from potential claims by other creditors or parties with interests in the property. It also ensures transparency and helps maintain public records that can be accessed for verification or legal purposes.
Understanding recordation of assignments of mortgage through an example
For example, a lender sells a mortgage loan to another financial institution. To complete the transfer of rights, the lender (assignor) records the assignment of the mortgage with the local registry office, specifying the new holder (assignee) of the mortgage. This action officially establishes the new lender’s right to collect payments from the borrower and to enforce the terms of the mortgage if the borrower defaults.
In another example, a mortgage servicer transfers its rights to a different servicer. The transfer must be recorded with the appropriate authority to ensure that the new servicer is recognized as the party responsible for managing the mortgage and communicating with the borrower. This protects the servicer's interests and ensures that the borrower’s payments are properly credited.
An example of a recordation of assignments of mortgage clause
Here’s how a recordation of assignments of mortgage clause might appear in a contract:
“Upon the assignment of this mortgage, the Assignor shall execute and deliver to the Assignee an Assignment of Mortgage, which shall be recorded in the appropriate county or jurisdiction. The Assignor shall ensure that the recordation of the assignment occurs within [X] days from the date of this Agreement to provide public notice of the transfer of the mortgage.”
Conclusion
The recordation of assignments of mortgage is a crucial step in the process of transferring mortgage rights. It ensures that the new mortgage holder’s rights are legally recognized, providing clarity, transparency, and protection for all parties involved. Proper recordation helps avoid disputes, ensures the enforceability of the mortgage, and maintains an accurate public record of property ownership and financial obligations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.