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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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Home > Amerinote Xchange Blog > Market Trends > Understanding Mortgage Assignment: How It Works and What You Need to Know

Understanding Mortgage Assignment: How It Works and What You Need to Know

Jennifer Park Published: July 15, 2024 | Updated: July 10, 2024

When a homebuyer gets a mortgage, they agree to pay back the money they borrowed from a lender, usually a bank. These payments are usually made over a period of many years with interest, which is how the lender makes money.  If the borrower doesn’t make payments, the mortgage gives the lender the ability to foreclose on the property to recoup their investment. 

Sometimes, though, the lender decides they don’t want to wait for those years of payments. Instead, they might choose to sell the mortgage to another company. This transfer is called a mortgage assignment, or in some states, an assignment of deed of trust. Here’s everything you should know about how mortgage assignments work.

What is an Assignment of Mortgage?

An assignment of mortgage, or assignment of deed of trust, is a process where the original lender transfers their interest in a mortgage to another party. This could be another bank, a special company that handles mortgages, or an investor interested in buying debts. The original lender sells the right to collect payments from the homebuyer to someone else. This is done with legal agreements to ensure everything is fair and follows the law.

This process is important for lenders because it allows them to get back much of the money they lent without waiting for the 20 or 30 years it might take the borrower to pay it all back. For the new owner of the mortgage, it’s a chance to invest in a steady flow of income.

Some mortgage lenders are homeowners who became mortgage note holders when they sold their house. If the prospective buyer is not able to secure a loan from a bank, these homeowners might choose to offer seller financing . In this arrangement, the seller acts as the lender, agreeing to sign over the house in return for receiving monthly payments until the value of the loan is paid off.

However, if circumstances change and the homeowner wants to receive a lump sum payment or no longer wants the responsibility of managing the loan, they might consider selling the mortgage note to an investor or a specialized company. This sale is facilitated through the mortgage assignment process, transferring all rights and responsibilities to the new owner.

The Mortgage Assignment Process

Let’s walk through what happens during a mortgage assignment:

• Decision to Sell the Mortgage: The lender decides they would like to sell the mortgage. This could be because they no longer want to bear the risk of the loan, or would like to receive a lump sum payment.
• Finding a Buyer: The lender looks for a party interested in buying your mortgage. This buyer could be another bank, a company that specializes in buying and managing mortgages, or even a group of investors. The important thing is that they have the money to buy the mortgage and are willing to take on the responsibility of collecting payments.
• Handling the Legal Paperwork: Once a buyer is found, there’s a lot of paperwork to handle. The most important piece is the “assignment of mortgage document or the “assignment of deed of trust”, a document that officially transfers the ownership of the mortgage from the old lender to the new one. This document must be signed and usually notarized, which means an official witness confirms that all parties signed willingly and correctly. There must also be a transfer of the promissory note, through a process known as mortgage endorsement .
• Notifying the Homeowner: After the mortgage is officially transferred to the new owner, the homeowner will be notified. This notification lets them know who the new owner of their mortgage is, their contact information and where to send their future mortgage payments. 

Deed of Trust vs. Mortgage

In some states, instead of a mortgage note, the lender may have something called a deed of trust. This can also be transferred to a buyer in the same way. A deed of trust and a mortgage both serve the same purpose — to secure a loan on a property. There are  some key differences in how they operate .

Deed of Trust

Involves Three Parties: A deed of trust involves three parties: the borrower, the lender and a trustee. The trustee holds the legal title to the property until the loan is fully paid off.

Non-Judicial Foreclosure: In most cases, a deed of trust allows for non-judicial foreclosure, meaning the trustee can sell the property without court involvement if the borrower defaults on the loan.

Involves Two Parties: A traditional mortgage involves just two parties: the borrower and the lender. The legal title remains with the borrower, and the lender has a lien on the property.

Judicial Foreclosure : Foreclosure under a mortgage typically requires going through the court, making it a longer and possibly more complicated process than with a deed of trust.

Legal and Regulatory Considerations

When a mortgage is assigned from one lender to another, several legal and regulatory considerations must be addressed to ensure the process is handled correctly. Each state has its own laws that affect how mortgages can be transferred, which is why it can be important to know your local rules before selling your mortgage note.

State Laws on Mortgage Assignment

State laws dictate how a mortgage assignment must be recorded and what documentation is required. For example, some states require that the assignment of the mortgage document be filed with the county where the property is located. This helps maintain a clear and public record of who owns the mortgage. Additionally, these laws ensure that the homeowner is protected and that the transfer of mortgage ownership is transparent.

Judicial vs. Non-Judicial Foreclosure Processes

Depending on the state, the foreclosure process can vary significantly. In judicial foreclosure states, the lender must go through the court system to foreclose on a home. This process can be lengthy and requires filing a lawsuit and getting a court judgment. In non-judicial foreclosure states, lenders can foreclose without court involvement if the mortgage agreement includes a power of sale clause. This clause allows the lender to sell the property to pay off the mortgage if the homeowner defaults. 

Compliance Requirements

During a mortgage assignment, all parties must comply with federal and state regulations that protect homeowners. For instance, the  Real Estate Settlement Procedures Act (RESPA) requires that borrowers be notified of any change in the ownership of their mortgage. This notification must be sent within 15 days after the mortgage has been sold or assigned. Ensuring compliance helps maintain trust and avoids legal complications.

Why Sell a Mortgage?

You might wonder why a lender would want to sell a mortgage to a mortgage note buyer instead of just waiting to collect all the payments. There are several reasons why selling the mortgage can be beneficial for the lender:

• Managing Financial Resources: By selling a mortgage, lenders can get a large amount of money upfront instead of waiting for monthly payments. This immediate influx of cash can help them invest in other areas, offer more loans, or strengthen their financial footing.
• Risk Management: Holding onto a mortgage comes with risks, especially if the homeowner has trouble making payments. By selling the mortgage, the original lender transfers this risk to the buyer of the mortgage. This can be a strategic move to manage the lender’s overall risk exposure.
• Investment Strategy: Lenders might sell mortgages as part of their investment strategy. Selling mortgages can help them diversify their investments and adjust their portfolios according to market conditions or their financial goals.

Choosing the Right Buyer For A Mortgage Note

For lenders, finding the right mortgage or deed of trust buyer is an important part of the assignment process. Here are some criteria to consider when selecting a mortgage note buyer :

• Reputation and Reliability: The reputation of the buyer is vital. Lenders should look for buyers who have a solid track record of fair dealings and reliability. A good indicator are reviews from actual buyers and a brand presence. This ensures that the mortgage will be managed properly after the assignment.
• Transparency: Transparency during the mortgage assignment process is essential for trust. Buyers who provide clear information about the terms of the purchase and who maintain open communication are preferable.
• Competitive Pricing: Finally, the price offered for the mortgage note is a critical factor. Lenders should seek buyers who offer competitive pricing, which reflects the value of the mortgage and the income it generates.

Jennifer Park

Jennifer is an expert writer who focuses primarily on writing finance, investing, and real estate topics. She has been working as a writer since 2013. See full bio.

Molly Corson

Molly Corson is the Co-Founder and Marketing Director at Amerinote Xchange. Molly's diversified background and experience lies in the areas marketing ad-tech, team-building, operations-management, sales and strategic relations management. Molly has a BA degree from Temple University. See full bio.

Financially Reviewed By

Abby Shemesh

Abby is the co-founder and Chief Acquisitions Officer at Amerinote Xchange. He has been operating within the mortgage market for over a decade. Abby was featured on industry publications like Yahoo! Finance, MSN Money, Realtor.com, and GOBankingRates.com. See full bio.

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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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What is an Assignment of Mortgage?

In real estate, an assignment of mortgage is the transfer of a mortgage, or mortgage note , to another party which typically happens on the servicing side or lender side. This is commonly seen one when lender sells or transfers your mortgage to another lender. Lenders typically have the right to to sell mortgages and assign them to new parties, but don’t typically allow borrowers to do the same. When a borrower transfers their mortgage obligation to a new party, this is called an assumed mortgage.

Assignment of Mortgage Examples

Examples where you will find assignment of mortgages include:

• Example 1. A lender selling your mortgage to another lender for servicing.

Here’s Property Shark’s definition of assignment of mortgage .

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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.

Chapter B8-6, Mortgage Assignments

Mortgage assignments table of contents.

• B8-6-01, Authorized Use of Intervening and Blanket Assignments

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(Published: September 04 2024)

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• Copyright and Preface
• A1-1-01, Application and Approval of Seller/Servicer
• A2-1-01, Contractual Obligations for Sellers/Servicers
• A2-1-02, Nature of Mortgage Transaction
• A2-1-03, Indemnification for Losses
• A2-2-01, Representations and Warranties Overview
• A2-2-02, Delivery Information and Delivery-Option Specific Representations and Warranties
• A2-2-03, Document Warranties
• A2-2-04, Limited Waiver and Enforcement Relief of Representations and Warranties
• A2-2-05, Invalidation of Limited Waiver of Representations and Warranties
• A2-2-06, Representations and Warranties on Property Value
• A2-2-07, Life-of-Loan Representations and Warranties
• A2-3.1-01, Lender Breach of Contract
• A2-3.1-02, Sanctions, Suspensions, and Terminations
• A2-3.2-01, Loan Repurchases and Make Whole Payments Requested by Fannie Mae
• A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility
• A2-3.2-03, Remedies Framework
• A2-3.3-01, Compensatory Fees
• A2-4.1-01, Establishing Loan Files
• A2-4.1-02, Ownership and Retention of Loan Files and Records
• A2-4.1-03, Electronic Records, Signatures, and Transactions
• A2-4.1-04, Notarization Standards
• A2-5-01, Fannie Mae Trade Name and Trademarks
• A3-1-01, Fannie Mae’s Technology Products
• A3-2-01, Compliance With Laws
• A3-2-02, Responsible Lending Practices
• A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations
• A3-3-02, Concurrent Servicing Transfers
• A3-3-03, Other Servicing Arrangements
• A3-3-04, Document Custodians
• A3-3-05, Custody of Mortgage Documents
• A3-4-01, Confidentiality of Information
• A3-4-02, Data Quality and Integrity
• A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud
• A3-5-01, Fidelity Bond and Errors and Omissions Coverage Provisions
• A3-5-02, Fidelity Bond Policy Requirements
• A3-5-03, Errors and Omissions Policy Requirements
• A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events
• A4-1-01, Maintaining Seller/Servicer Eligibility
• A4-1-02, Submission of Financial Statements and Reports
• A4-1-03, Report of Changes in the Seller/Servicer’s Organization
• A4-1-04, Submission of Irrevocable Limited Powers of Attorney
• B1-1-01, Contents of the Application Package
• B1-1-02, Blanket Authorization Form
• B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns
• B2-1.1-01, Occupancy Types
• B2-1.2-01, Loan-to-Value (LTV) Ratios
• B2-1.2-02, Combined Loan-to-Value (CLTV) Ratios
• B2-1.2-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios
• B2-1.2-04, Subordinate Financing
• B2-1.3-01, Purchase Transactions
• B2-1.3-02, Limited Cash-Out Refinance Transactions
• B2-1.3-03, Cash-Out Refinance Transactions
• B2-1.3-04, Prohibited Refinancing Practices
• B2-1.3-05, Payoff of Installment Land Contract Requirements
• B2-1.4-01, Fixed-Rate Loans
• B2-1.4-02, Adjustable-Rate Mortgages (ARMs)
• B2-1.4-03, Convertible ARMs
• B2-1.4-04, Temporary Interest Rate Buydowns
• B2-1.5-01, Loan Limits
• B2-1.5-02, Loan Eligibility
• B2-1.5-03, Legal Requirements
• B2-1.5-04, Escrow Accounts
• B2-1.5-05, Principal Curtailments
• B2-2-01, General Borrower Eligibility Requirements
• B2-2-02, Non–U.S. Citizen Borrower Eligibility Requirements
• B2-2-03, Multiple Financed Properties for the Same Borrower
• B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction
• B2-2-05, Inter Vivos Revocable Trusts
• B2-2-06, Homeownership Education and Housing Counseling
• B2-2-07, First-Generation Homebuyer Loans
• B2-3-01, General Property Eligibility
• B2-3-02, Special Property Eligibility and Underwriting Considerations: Factory-Built Housing
• B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates
• B2-3-04, Special Property Eligibility Considerations
• B2-3-05, Properties Affected by a Disaster
• B3-1-01, Comprehensive Risk Assessment
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• B3-2-02, DU Validation Service
• B3-2-03, Risk Factors Evaluated by DU
• B3-2-04, DU Documentation Requirements
• B3-2-05, Approve/Eligible Recommendations
• B3-2-06, Approve/Ineligible Recommendations
• B3-2-07, Refer with Caution Recommendations
• B3-2-08, Out of Scope Recommendations
• B3-2-09, Erroneous Credit Report Data
• B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report
• B3-2-11, DU Underwriting Findings Report
• B3-3.1-01, General Income Information
• B3-3.1-02, Standards for Employment Documentation
• B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income
• B3-3.1-04, Commission Income
• B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income
• B3-3.1-06, Requirements and Uses of IRS IVES Request for Transcript of Tax Return Form 4506-C
• B3-3.1-07, Verbal Verification of Employment
• B3-3.1-08, Rental Income
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• B3-3.1-10, Income Calculator
• B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower
• B3-3.2-02, Business Structures
• B3-3.2-03, IRS Forms Quick Reference
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• B3-3.3-07, Income or Loss Reported on IRS Form 1065 or IRS Form 1120S, Schedule K-1
• B3-3.4-01, Analyzing Partnership Returns for a Partnership or LLC
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• B3-3.4-04, Analyzing Profit and Loss Statements
• B3-3.5-01, Income and Employment Documentation for DU
• B3-3.5-02, Income from Rental Property in DU
• B3-4.1-01, Minimum Reserve Requirements
• B3-4.1-02, Interested Party Contributions (IPCs)
• B3-4.1-03, Types of Interested Party Contributions (IPCs)
• B3-4.1-04, Virtual Currency
• B3-4.2-01, Verification of Deposits and Assets
• B3-4.2-02, Depository Accounts
• B3-4.2-03, Individual Development Accounts
• B3-4.2-04, Pooled Savings (Community Savings Funds)
• B3-4.2-05, Foreign Assets
• B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds
• B3-4.3-02, Trust Accounts
• B3-4.3-03, Retirement Accounts
• B3-4.3-04, Personal Gifts
• B3-4.3-05, Gifts of Equity
• B3-4.3-06, Grants and Lender Contributions
• B3-4.3-07, Disaster Relief Grants or Loans
• B3-4.3-08, Employer Assistance
• B3-4.3-09, Earnest Money Deposit
• B3-4.3-10, Anticipated Sales Proceeds
• B3-4.3-11, Trade Equity
• B3-4.3-12, Rent-Related Credits
• B3-4.3-13, Sweat Equity
• B3-4.3-14, Bridge/Swing Loans
• B3-4.3-15, Borrowed Funds Secured by an Asset
• B3-4.3-16, Credit Card Financing and Reward Points
• B3-4.3-17, Personal Unsecured Loans
• B3-4.3-18, Sale of Personal Assets
• B3-4.3-19, Cash Value of Life Insurance
• B3-4.3-20, Anticipated Savings and Cash-on-Hand
• B3-4.3-21, Borrower's Earned Real Estate Commission
• B3-4.4-01, DU Asset Verification
• B3-4.4-02, Requirements for Certain Assets in DU
• B3-5.1-01, General Requirements for Credit Scores
• B3-5.1-02, Determining the Credit Score for a Mortgage Loan
• B3-5.2-01, Requirements for Credit Reports
• B3-5.2-02, Types of Credit Reports
• B3-5.2-03, Accuracy of Credit Information in a Credit Report
• B3-5.3-01, Number and Age of Accounts
• B3-5.3-02, Payment History
• B3-5.3-03, Previous Mortgage Payment History
• B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit
• B3-5.3-05, Credit Utilization
• B3-5.3-06, Authorized Users of Credit
• B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit
• B3-5.3-08, Extenuating Circumstances for Derogatory Credit
• B3-5.3-09, DU Credit Report Analysis
• B3-5.4-01, Eligibility Requirements for Loans with Nontraditional Credit
• B3-5.4-02, Number and Types of Nontraditional Credit References
• B3-5.4-03, Documentation and Assessment of a Nontraditional Credit History
• B3-6-01, General Information on Liabilities
• B3-6-02, Debt-to-Income Ratios
• B3-6-03, Monthly Housing Expense for the Subject Property
• B3-6-04, Qualifying Payment Requirements
• B3-6-05, Monthly Debt Obligations
• B3-6-06, Qualifying Impact of Other Real Estate Owned
• B3-6-07, Debts Paid Off At or Prior to Closing
• B3-6-08, DU: Requirements for Liability Assessment
• B4-1.1-01, Definition of Market Value
• B4-1.1-02, Lender Responsibilities
• B4-1.1-03, Appraiser Selection Criteria
• B4-1.1-04, Unacceptable Appraisal Practices
• B4-1.1-05, Disclosure of Information to Appraisers
• B4-1.1-06, Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP)
• B4-1.2-01, Appraisal Report Forms and Exhibits
• B4-1.2-02, Desktop Appraisals
• B4-1.2-03, Hybrid Appraisals
• B4-1.2-04, Appraisal Age and Use Requirements
• B4-1.2-05, Requirements for Verifying Completion and Postponed Improvements
• B4-1.3-01, Review of the Appraisal Report
• B4-1.3-02, Subject and Contract Sections of the Appraisal Report
• B4-1.3-03, Neighborhood Section of the Appraisal Report
• B4-1.3-04, Site Section of the Appraisal Report
• B4-1.3-05, Improvements Section of the Appraisal Report
• B4-1.3-06, Property Condition and Quality of Construction of the Improvements
• B4-1.3-07, Sales Comparison Approach Section of the Appraisal Report
• B4-1.3-08, Comparable Sales
• B4-1.3-09, Adjustments to Comparable Sales
• B4-1.3-10, Cost and Income Approach to Value
• B4-1.3-11, Valuation Analysis and Reconciliation
• B4-1.3-12, Appraisal Quality Matters
• B4-1.4-01, Factory-Built Housing: Manufactured Housing
• B4-1.4-02, Factory-Built Housing: Modular, Prefabricated, Panelized, or Sectional Housing
• B4-1.4-03, Condo Appraisal Requirements
• B4-1.4-04, Co-op Appraisal Requirements
• B4-1.4-05, Leasehold Interests Appraisal Requirements
• B4-1.4-06, Community Land Trust Appraisal Requirements
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• B4-1.4-08, Environmental Hazards Appraisal Requirements
• B4-1.4-09, Special Assessment or Community Facilities Districts Appraisal Requirements
• B4-1.4-10, Value Acceptance (Appraisal Waiver)
• B4-1.4-11, Value Acceptance + Property Data
• B4-2.1-01, General Information on Project Standards
• B4-2.1-02, Waiver of Project Review
• B4-2.1-03, Ineligible Projects
• B4-2.1-04, Environmental Hazard Assessments
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• B4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo Projects
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• B5-3.2-02, HomeStyle Renovation Mortgages: Loan and Borrower Eligibility
• B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations
• B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts
• B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certification
• B5-3.2-06, HomeStyle Renovation: Renovation Contract, Renovation Loan Agreement, and Lien Waiver
• B5-3.3-01, HomeStyle Energy for Improvements on Existing Properties
• B5-3.4-01, Property Assessed Clean Energy Loans
• B5-4.1-01, Texas Section 50(a)(6) Loans
• B5-4.1-02, Texas Section 50(a)(6) Loan Eligibility
• B5-4.1-03, Texas Section 50(a)(6) Loan Underwriting, Collateral, and Closing Considerations
• B5-4.1-04, Texas Section 50(a)(6) Loan Delivery and Servicing Considerations
• B5-4.2-01, Native American Conventional Lending Initiative (NACLI)
• B5-4.2-02, Disaster-Related Limited Cash-Out Refinance Flexibilities
• B5-4.2-03, Loans Secured by HomePath Properties
• B5-5.1-01, Community Seconds Loans
• B5-5.1-02, Community Seconds Loan Eligibility
• B5-5.1-03, Community Seconds: Shared Appreciation Transactions
• B5-5.2-01, Loans With Resale Restrictions: General Information
• B5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements
• B5-5.3-01, Shared Equity Overview
• B5-5.3-02, Shared Equity Transactions: General Requirements
• B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral Requirements
• B5-5.3-04, Massachusetts Resale Restriction Loan Eligibility Requirements
• B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility
• B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements
• B5-6-03, HomeReady Mortgage Loan Pricing, Mortgage Insurance, and Special Feature Codes
• B5-7-01, High LTV Refinance Loan and Borrower Eligibility
• B5-7-02, High LTV Refinance Underwriting, Documentation, and Collateral Requirements for the New Loan
• B5-7-03, High LTV Refinance Alternative Qualification Path
• B5-7-04, High LTV Refinance Representations and Warranties
• B5-7-05, High LTV Refinance Pricing, Mortgage Insurance, and Special Feature Codes
• B6-1-01, General Government Mortgage Loan Requirements
• B6-1-02, Eligible FHA-Insured Mortgage Loans
• B6-1-03, Eligible VA-Guaranteed Mortgages
• B6-1-04, Eligible HUD-Guaranteed Section 184 Mortgages
• B6-1-05, Eligible RD-Guaranteed Mortgages
• B7-1-01, Provision of Mortgage Insurance
• B7-1-02, Mortgage Insurance Coverage Requirements
• B7-1-03, Lender-Purchased Mortgage Insurance
• B7-1-04, Financed Borrower-Purchased Mortgage Insurance
• B7-1-05, Government Mortgage Loan Guaranty or Insurance
• B7-2-01, Provision of Title Insurance
• B7-2-02, Title Insurer Requirements
• B7-2-03, General Title Insurance Coverage
• B7-2-04, Special Title Insurance Coverage Considerations
• B7-2-05, Title Exceptions and Impediments
• B7-2-06, Attorney Title Opinion Letter Requirements
• B7-3-01, General Property Insurance Requirements for All Property Types
• B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties
• B7-3-03, Master Property Insurance Requirements for Project Developments
• B7-3-04, Individual Property Insurance Requirements for a Unit in a Project Development
• B7-3-05, Additional Insurance Requirements
• B7-3-06, Flood Insurance Requirements for All Property Types
• B7-3-07, Evidence of Property Insurance
• B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements
• B7-4-01, General Liability Insurance Requirements for Project Developments
• B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments
• B8-1-01, Publication of Legal Documents
• B8-2-01, Security Instruments for Conventional Mortgages
• B8-2-02, Special-Purpose Security Instruments
• B8-2-03, Signature Requirements for Security Instruments
• B8-3-01, Notes for Conventional Mortgages
• B8-3-02, Special Note Provisions and Language Requirements
• B8-3-03, Signature Requirements for Notes
• B8-3-04, Note Endorsement
• B8-4-01, Riders and Addenda
• B8-5-01, General Information on Special-Purpose Legal Documents
• B8-5-02, Inter Vivos Revocable Trust Mortgage Documentation and Signature Requirements
• B8-5-03, HomeStyle Renovation Mortgage Documentation Requirements
• B8-5-04, Sample Legal Documents
• B8-5-05, Requirements for Use of a Power of Attorney
• B8-7-01, Mortgage Electronic Registration Systems (MERS), Inc.
• B8-8-01, General Information on eMortgages
• B8-8-02, Requirements for Creating, Closing, and Correcting eNotes
• C1-1-01, Execution Options
• C1-2-01, General Information on Delivering Loan Data and Documents
• C1-2-02, Loan Data and Documentation Delivery Requirements
• C1-2-03, Ownership of Mortgage Loans Prior to Purchase or Securitization and Third-Party Security Interests
• C1-2-04, Delivering eMortgages to Fannie Mae
• C1-2-05, Delivering Green MBS to Fannie Mae
• C1-2-06, Bailee Letters
• C1-3-01, General Information on Remittance Types
• C2-1.1-01, Mandatory Commitment Process
• C2-1.1-02, General Information about Mandatory Commitment Pricing and Fees
• C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods and Other Requirements
• C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs
• C2-1.1-05, Servicing Fees
• C2-1.1-06, Accrued Interest Payments for Regularly Amortizing Mortgages
• C2-1.1-07, Standard ARM and Converted ARM Resale Commitments
• C2-1.2-01, Best Efforts Commitment Process
• C2-1.2-02, Best Efforts Commitment Pricing, Periods, and Fees
• C2-1.2-03, Best Efforts Commitment Terms, Amounts, and Other Requirements
• C2-1.3-01, Servicing Marketplace
• C2-2-01, General Requirements for Good Delivery of Whole Loans
• C2-2-02, Documentation Requirements for Whole Loan Deliveries
• C2-2-03, General Information on Whole Loan Purchasing Policies
• C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds
• C2-2-05, Whole Loan Purchasing Process
• C2-2-06, Authorization to Transfer Funds
• C2-2-07, Purchase Payee Codes
• C3-1-01, General Information About Fannie Mae’s MBS Program
• C3-1-02, Preparing to Pool Loans into MBS
• C3-2-01, Determining Eligibility for Loans Pooled into MBS
• C3-2-02, Selecting a Servicing Option
• C3-2-03, MBS Remittance Type and Selecting a Remittance Cycle
• C3-2-04, Mandatory MBS Commitments
• C3-3-01, Determining and Remitting Guaranty Fees
• C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Payments or Charges
• C3-3-03, Buying Up and Buying Down the Guaranty Fee for MBS
• C3-4-01, Term-Related Fixed-Rate Mortgage Pooling Parameters
• C3-5-01, Creating Weighted-Average ARM MBS
• C3-5-02, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin
• C3-5-03, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average MBS Margin
• C3-5-04, Pooling ARMs with a Conversion Option
• C3-5-05, Commingling ARMs in MBS
• C3-6-01, Parameters for Pooling Loans Into Fannie Majors
• C3-7-01, Establishing an MBS Trading Account
• C3-7-02, Initiating an MBS Sale
• C3-7-03, Making Good Delivery
• C3-7-04, Delivering MBS Pool Data and Documents
• C3-7-05, Confirming Presettlement Information
• C3-7-06, Settling the Trade
• C3-7-07, Sale of Fannie Mae Securities to Third Parties
• D1-1-01, Lender Quality Control Programs, Plans, and Processes
• D1-1-02, Lender Quality Control Staffing and Outsourcing of the Quality Control Process
• D1-2-01, Lender Prefunding Quality Control Review Process
• D1-3-01, Lender Post-Closing Quality Control Review Process
• D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, and Documentation
• D1-3-03, Lender Post-Closing Quality Control Review of Data Integrity
• D1-3-04, Lender Post-Closing Quality Control Review of Appraisers, Appraisals, Property Data Collectors, and Property Data Collection
• D1-3-05, Lender Post-Closing Quality Control Review of Closing Documents
• D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit
• D2-1-01, General Information on Fannie Mae QC Reviews
• D2-1-02, Fannie Mae QC File Request and Submission Requirements
• D2-1-03, Outcomes of Fannie Mae QC Reviews
• D2-1-04, Identifying and Remedying Origination Defects Under the Remedies Framework
• E-1-01, References to Fannie Mae's Website
• E-1-02, List of Contacts
• E-1-03, List of Lender Contracts
• E-2-01, Required Custodial Documents
• E-2-02, Suggested Format for Phase I Environmental Hazard Assessments
• E-2-03, Revocable Trust Rider (Sample Language)
• E-2-04, Signature Requirements for Mortgages to Inter Vivos Revocable Trusts
• E-2-05, Servicing Marketplace — Mortgage Loan Servicing Purchase and Sale Agreement
• E-2-06, Correcting Errors in eNotes
• E-2-07, Description of eNote Header, Footer, and eNote Clause
• E-3-01, Acronyms and Glossary of Defined Terms: A
• E-3-02, Acronyms and Glossary of Defined Terms: B
• E-3-03, Acronyms and Glossary of Defined Terms: C
• E-3-04, Acronyms and Glossary of Defined Terms: D
• E-3-05, Acronyms and Glossary of Defined Terms: E
• E-3-06, Acronyms and Glossary of Defined Terms: F
• E-3-07, Acronyms and Glossary of Defined Terms: G
• E-3-08, Acronyms and Glossary of Defined Terms: H
• E-3-09, Acronyms and Glossary of Defined Terms: I
• E-3-10, Acronyms and Glossary of Defined Terms: J
• E-3-11, Acronyms and Glossary of Defined Terms: K
• E-3-12, Acronyms and Glossary of Defined Terms: L
• E-3-13, Acronyms and Glossary of Defined Terms: M
• E-3-14, Acronyms and Glossary of Defined Terms: N
• E-3-15, Acronyms and Glossary of Defined Terms: O
• E-3-16, Acronyms and Glossary of Defined Terms: P
• E-3-17, Acronyms and Glossary of Defined Terms: Q
• E-3-18, Acronyms and Glossary of Defined Terms: R
• E-3-19, Acronyms and Glossary of Defined Terms: S
• E-3-20, Acronyms and Glossary of Defined Terms: T
• E-3-21, Acronyms and Glossary of Defined Terms: U
• E-3-22, Acronyms and Glossary of Defined Terms: V
• E-3-23, Acronyms and Glossary of Defined Terms: W
• E-3-24, Acronyms and Glossary of Defined Terms: X
• E-3-25, Acronyms and Glossary of Defined Terms: Y
• E-3-26, Acronyms and Glossary of Defined Terms: Z

What Is Mortgage Assignment vs. Mortgage Assumption?

Mortgage assumption is now rare, while mortgage assignment is quite common.

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More Articles

•   1. How to Invest in Property With No Money Down
•   2. What Does It Mean When a Mortgage Matures?
•   3. How to Assume a Promissory Note

Mortgage assignment, usually involving a mortgage lender, is very different from mortgage assumption, involving a homebuyer. Mortgage assignments occur when the original lender transfers the mortgage loan to a third party. Lenders who sell mortgages, which is most of them, assign their mortgages to others, who become the owners of the loans. Mortgage assumption occurs when a homebuyer assumes the home seller's existing loan, making all future payments. Buyers become the new mortgage borrowers.

Due on Sale Clauses

Most contemporary mortgages include due on sale clauses. This means that if a transfer of ownership occurs in the form of a home sale, the current mortgage must be paid off, as the balance becomes due. Due on sale language eliminates the option for a buyer to assume the mortgage on the home she's buying. Due on sale clauses have little effect on mortgage assignments to buyers or other third parties. Due on sale language helps make mortgage assignments easier, as the loan buyer knows the mortgage will be paid off when the property is sold.

Government Loans

While most mortgage loans are sold and assigned to others, few mortgages are assumable. Federal Housing Administration and Veterans Administration mortgages, commonly called government loans, are the only legally assumable home loans left in the mortgage market. Government loans also may be assigned to third party buyers, as other mortgage loans are. Assuming government loans is not automatic, as the homebuyers must qualify for these mortgages, meeting FHA and VA income and credit guidelines.

Third Parties

While most contemporary mortgage assignments involve lenders selling their loans, borrowers may assign their mortgages, if their loan note language permits, to third parties. Although this is technically a form of mortgage assumption, it differs from traditional legal assumption in that the original borrower who assigned the mortgage remains responsible for the loan balance if the assignee does not make scheduled monthly payments. While both mortgage assignment and assumption involve third parties, the position of mortgage loan buyers and mortgage assignees is legally different.

While rare, novation is more of a hybrid of mortgage assumption and mortgage assignment. When permitted, the mortgage loan is both assumed by and assigned to another borrower. However, the original borrower is no longer responsible for monthly payments or personally liable for the balance of the loan. Legally, novation equals a new obligation, but with the same terms, including interest rate, of the former mortgage loan. Few contemporary mortgage loan notes permit this form of assumption and assignment.

Significance

Until the 1970s, mortgage assumptions were common, while mortgage assignments were rare. After the federal government created mortgage companies Fannie Mae and Freddie Mac and after due on sale clauses became popular, the roles reversed. For the past four decades, few mortgage loans were assumable, while most mortgage loans were sold and assigned to third parties. The contemporary practices benefit lenders but do not help borrowers, particularly when interest rates rise. Lenders reduce their rate risk, shifting most of the risk to mortgage borrowers, since homebuyers cannot assume lower interest rate mortgage loans.

• Financial Web: Understanding Assumptions
• Lender 411: Transferring a Mortgage

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D2-3.4-03, Assignment of a Mortgage Loan to the Insurer or Guarantor (11/12/2014)

Assignment of a conventional mortgage loan to the mortgage insurer, assignment of a hud or va mortgage loan to the insurer or guarantor.

If the mortgage insurer exercises a right under the master policy to acquire a delinquent conventional first lien mortgage loan, the servicer must assign the mortgage loan to the mortgage insurer and take whatever action is necessary to obtain payment under the insurance policy.

If the mortgage insurer instructs the servicer to assign an insured delinquent second lien conventional mortgage loan to it rather than continuing the foreclosure process, the servicer must prepare the necessary legal documents to assign the second lien mortgage loan and file a claim under the insurance contract.

See the Investor Reporting Manual for reporting the assignment to Fannie Mae.

If the mortgage insurer or guarantor exercises its right under the policy to acquire a delinquent government mortgage loan or an assignment is the only way to liquidate a mortgage loan, the servicer must

assign the mortgage loan to the insurer or guarantor and take required follow-up actions in compliance with applicable regulations and procedures,

file a claim with the insurer or guarantor, and

report the assignment to Fannie Mae. See the Investor Reporting Manual for reporting the assignment to Fannie Mae.

Fannie Mae will hold the servicer accountable for any loss Fannie Mae incurs because it failed to assign a VA-guaranteed mortgage loan for refunding when the VA instructed it to do so.

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• Copyright and Preface
• A1-1-01, Application and Approval of Seller/Servicer
• A1-1-02, Representation and Warranty Requirements
• A1-1-03, Evaluating a Servicer’s Performance
• A1-2-01, Servicer’s Termination of the Lender Contract
• A1-2-02, Fannie Mae’s Termination of the Lender Contract without Cause
• A1-3-01, Requirements for Voluntary Repurchase
• A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations
• A1-3-03, Repurchase Obligations Related to Bifurcated Mortgage Loans
• A1-3-04, Reporting the Repurchase
• A1-3-05, Redelivering a Mortgage Loan
• A1-3-06, Automatic Reclassification of MBS Mortgage Loans
• A1-4.1-01, Defining a Breach of Contract
• A1-4.1-02, Fannie Mae’s Remedies
• A1-4.2-01, Compensatory Fees Other Than Delays in the Liquidation Process
• A1-4.2-02, Compensatory Fees for Delays in the Liquidation Process
• A2-1-01, General Servicer Duties and Responsibilities
• A2-1-02, Servicer’s Duties and Responsibilities Related to MBS Mortgage Loans
• A2-1-03, Servicer's Duties and Responsibilities Related to Mortgage Loans with Resale Restrictions or Shared Equity Transactions
• A2-1-04, Execution of Legal Documents
• A2-1-05, Note Holder Status for Legal Proceedings Conducted in the Servicer’s Name
• A2-1-06, Use of Fannie Mae Trademarks
• A2-1-07, Subservicing
• A2-1-08, First Lien Mortgage Loan Requirements
• A2-1-09, Compliance with Requirements and Laws
• A2-2-01, Refinance and Lending Practices
• A2-3-01, Servicer Compensation
• A2-3-02, Servicing Fees for Portfolio and MBS Mortgage Loans
• A2-3-03, Yield Differential Adjustments
• A2-3-04, Late Charges as Compensation
• A2-3-05, Fees for Certain Servicing Activities
• A2-3-06, Prepayment Premiums
• A2-4-01, Quality Control Reviews
• A2-5-01, Ownership and Retention of Individual Mortgage Loan Files and Records
• A2-6-01, Custodial Documents
• A2-7-01, Concurrent Servicing Transfers
• A2-7-02, Pledge of Servicing Rights and Transfer of Interest in Servicing Income
• A2-7-03, Post-Delivery Servicing Transfers
• A2-8-01, Mortgage Electronic Registration System
• A2-9-01, General Requirements
• A2-9-02, Special Provision for Puerto Rico
• A3-1-01, Maintaining Fannie Mae Seller/Servicer Status
• A4-1-01, Staffing, Training, Procedures, and Quality Control Requirements
• A4-1-02, Establishing Custodial Bank Accounts
• A4-1-03, Addressing Borrower Inquiries and Disputes
• A4-2.1-01, Preventing Defaults and Managing Delinquencies
• A4-2.1-02, Property Inspection Vendor Management and Oversight
• A4-2.1-03, Managing Short Sales
• A4-2.1-04, Establishing Contact with the Borrower
• A4-2.1-05, Requirements for Collection and Foreclosure Prevention Strategies Unique to Second Lien Mortgage Loans
• A4-2.1-06, Adverse Action Notification Certification
• A4-2.1-07, Servicer's Duties and Responsibilities Related to Mortgage Loans with an Outstanding Non-Interest-Bearing Balance
• A4-2.2-01, Selecting and Retaining Law Firms
• A4-2.2-02, Law Firm Management and Oversight
• A4-2.2-03, Prohibition Against Servicer-Specified Vendors for Fannie Mae Referrals, Use of Vendors, and Outsourcing Companies
• A4-2.2-04, Law Firm Suspensions, Matter Transfers, and Terminations
• B-1-01, Administering an Escrow Account and Paying Expenses
• B-2-01, Property Insurance Requirements Applicable to All Property Types
• B-2-02, Property Insurance Requirements for One- to Four-Unit Properties
• B-2-03, Master Property Insurance Requirements for Project Developments
• B-2-04, Individual Property Insurance Requirements for Units in Project Developments
• B-3-01, Flood Insurance Requirements Applicable to All Property Types
• B-4-01, Additional Insurance Requirements
• B-5-01, Insured Loss Events
• B-5-02, Uninsured Loss Events
• B-6-01, Lender-Placed Insurance Requirements
• B-7-01, General Liability Insurance Requirements for Project Developments
• B-7-02, Fidelity/Crime Insurance Requirements for Project Developments
• B-8.1-01, Conventional Mortgage Insurance Servicer Responsibilities
• B-8.1-02, Paying Conventional Mortgage Insurance Premiums
• B-8.1-03, Replacing Conventional Mortgage Insurance Policies
• B-8.1-04, Termination of Conventional Mortgage Insurance
• B-8.2-01, FHA Mortgage Insurance Coverage Requirements
• B-8.2-02, Conversion of FHA Coinsured Mortgage Loans to Full Insurance
• B-8.2-03, Termination or Cancellation of FHA Mortgage Insurance and FHA Mortgage Insurance Premium
• C-1.1-01, Servicer Responsibilities for Processing Mortgage Loan Payments
• C-1.1-02, Processing Payment Shortages or Funds Received When a Mortgage Loan Modification Is Pending
• C-1.1-03, Automatically Drafting Payments from the Borrower’s Bank Account
• C-1.1-04, Accepting Biweekly Payments from Third-Party Payment Contractors
• C-1.2-01, Processing Additional Principal Payments
• C-1.2-02, Processing Short Sale Proceeds
• C-1.2-03, Processing Payments in Full
• C-1.2-04, Satisfying the Mortgage Loan and Releasing the Lien
• C-1.2-05, Charging for a Release of Lien
• C-2.1-01, Responsibilities for ARM Loan Servicing
• C-2.1-02, Notifying the Borrower Regarding Interest Rate and/or Payment Changes
• C-2.2-01, Identifying and Disclosing Adjustment Errors
• C-2.2-02, Assuming Responsibility for Conversion Notice Errors
• C-2.2-03, Determining Whether to Provide a Refund or Credit for Overcharges
• C-2.3-01, Processing ARM Conversions to Fixed Rate Mortgage Loans
• C-2.3-02, Notifying Fannie Mae of Conversions for Portfolio Mortgage Loans
• C-2.3-03, Repurchasing Converted MBS Mortgage Loans and Redelivering Them to Fannie Mae
• C-3-01, Responsibilities Related to Remitting P&I Funds to Fannie Mae
• C-3-02, Remitting Payoff Proceeds
• C-4.1-01, Notifying Credit Repositories
• C-4.2-01, Filing IRS Forms
• C-4.3-01, Servicer Responsibilities Related to Investor Reporting
• D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan
• D1-1-02, Evaluating a First Lien Mortgage Loan for Charge-Off and Release of Lien
• D1-1-03, Evaluating a Second Lien Mortgage Charge-Off
• D1-2-01, Renovation Mortgage Loans
• D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower
• D1-4.1-01, Determining Whether a Transfer of Ownership Is Permitted
• D1-4.1-02, Allowable Exemptions Due to the Type of Transfer
• D1-4.1-03, Allowable Exceptions Due to State Law Restrictions (“Window-Period” Mortgage Loans)
• D1-4.1-04, Transfers of Ownership by Grant Deed
• D1-4.1-05, Enforcing the Due-on-Sale (or Due-on-Transfer) Provision
• D1-4.2-01, Conventional Mortgage Loans that Do Not Include a Due-on-Sale (or Due-on-Transfer) Provision
• D1-4.2-02, Conventional Mortgage Loans That Include a Due- on-Sale (or Due-on-Transfer) Provision
• D1-4.3-01, Transfers of Ownership on FHA and VA Mortgage Loans
• D1-4.3-02, Transfers of Ownership on RD Mortgage Loans
• D1-5-01, Call Options and Cross-Default Provisions
• D1-6-01, Requesting to Waive Certain Rights under the Mortgage Loan
• D1-6-02, Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest
• D1-6-03, Handling Property Forfeitures and Seizures
• D2-1-01, Determining if the Borrower’s Mortgage Payment is in Imminent Default
• D2-2-01, Achieving Quality Right Party Contact with a Borrower
• D2-2-02, Outbound Contact Attempt Requirements
• D2-2-03, Sending a Payment Reminder Notice
• D2-2-04, Sending a Borrower a Solicitation Package for a Workout Option
• D2-2-05, Receiving a Borrower Response Package
• D2-2-06, Sending a Breach or Acceleration Letter
• D2-2-07, Resolving an Appeal of a Mortgage Loan Modification Trial Period Plan Denial for a Principal Residence
• D2-2-08, Interviewing Face-to-Face with a Borrower for Certain FHA and HUD Mortgage Loans
• D2-2-09, Additional Borrower Contact Requirements for the Servicer of a Second Lien Mortgage Loan
• D2-2-10, Requirements for Performing Property Inspections
• D2-3.1-01, Determining the Appropriate Workout Option
• D2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan
• D2-3.1-03, Working with a Borrower that has a Group Home Mortgage Loan
• D2-3.1-04, Offering a Workout Option When Also Servicing a Subordinate Lien Mortgage Loan
• D2-3.1-05, Interacting with Mortgage Assistance Fund Program Providers
• D2-3.1-06, Notifying Fannie Mae of Lead-Based Paint Citations
• D2-3.2-01, Forbearance Plan
• D2-3.2-02, Repayment Plan
• D2-3.2-03, Government Mortgage Loan Modifications
• D2-3.2-04, Payment Deferral
• D2-3.2-05, Disaster Payment Deferral
• D2-3.2-06, Fannie Mae Flex Modification
• D2-3.3-01, Fannie Mae Short Sale
• D2-3.3-02, Fannie Mae Mortgage Release (Deed-in-Lieu of Foreclosure)
• D2-3.4-01, Military Indulgence
• D2-3.4-02, Offering a Mortgage Release (Deed-in-Lieu of Foreclosure) for a Second Lien Mortgage Loan
• D2-3.4-03, Assignment of a Mortgage Loan to the Insurer or Guarantor
• D2-3.4-04, Qualifying Mortgage Assumption Workout Option
• D2-4-01, Reporting a Delinquent Mortgage Loan to Fannie Mae
• D2-4-02, Reporting a Workout Option to Fannie Mae
• D2-4-03, Reporting Certain Workout Options to Treasury
• E-1.1-01, General Requirements for Referring a Mortgage Loan to a Law Firm
• E-1.1-02, Required Referral Documents
• E-1.1-03, Required Referral Data
• E-1.2-01, Timing of the Bankruptcy Referral
• E-1.2-02, Timing of the Foreclosure Referral for Mortgage Loans Generally
• E-1.2-03, Timing of the Foreclosure Referral for Second Lien Conventional Mortgage Loans Not Secured by a Principal Residence
• E-1.2-04, Timing of the Foreclosure Referral for Government Mortgage Loans
• E-1.3-01, General Servicer Responsibilities for Non-Routine Matters
• E-1.3-02, Reporting Non-Routine Litigation to Fannie Mae
• E-1.3-03, Reporting “Legal Filings” to MERS
• E-2.1-01, General Servicing Requirements for Mortgage Loans Under Bankruptcy Protection
• E-2.1-02, Confirming Bankruptcy Information
• E-2.1-03, Suspending Debt Collection Efforts
• E-2.1-04, Expected Servicer/Attorney Interaction During Bankruptcy Proceedings
• E-2.1-05, Filing a Notice of Appearance and Sending Proper Notices
• E-2.1-06, Reviewing Bankruptcy Reorganization Plans
• E-2.1-07, Preparing and Filing a Proof of Claim
• E-2.1-08, Monitoring Borrower Payments and Critical Dates
• E-2.1-09, Identifying Workout Opportunities
• E-2.1-10, Dealing with Delays in the Bankruptcy Process
• E-2.1-11, Remitting P&I for MBS Mortgage Loans That Are Part of a Bankruptcy
• E-2.2-01, Managing Chapter 7 Bankruptcies
• E-2.2-02, Managing Chapter 11 Bankruptcies
• E-2.2-03, Managing Chapter 12 Bankruptcies
• E-2.2-04, Managing Chapter 13 Bankruptcies
• E-2.3-01, Identifying Abusive Filers
• E-2.3-02, Addressing Individuals with Fractional Interests in a Security Property
• E-2.3-03, Handling Cramdowns of the Mortgage Debt
• E-2.3-04, Bankruptcies Involving Mortgage Loans Secured by Investment Properties
• E-2.3-05, Bankruptcies Involving Multiple Fannie Mae Mortgage Loans
• E-2.3-06, Responding to Bankruptcies Identified After Foreclosure Sale
• E-2.3-07, Cross-Border Insolvency Proceedings
• E-3.1-01, General Servicing Requirements Related to Foreclosure Proceedings
• E-3.1-02, Performing Due Diligence Prior to Considering Foreclosure
• E-3.1-03, Fannie Mae Address for Instruments of Record
• E-3.1-04, Addressing a Bankruptcy Filed During Active Foreclosure
• E-3.2-01, Conducting Prereferral Review
• E-3.2-02, Initiating Foreclosure Proceedings on a First Lien Conventional Mortgage Loan
• E-3.2-03, Initiating Foreclosure Proceedings on a Second Lien Conventional Mortgage Loan
• E-3.2-04, Postponing Foreclosure Referral for Mortgage Loans Not Secured by a Principal Residence
• E-3.2-05, Expected Servicer/Attorney Interaction During Foreclosure Proceedings
• E-3.2-06, Conducting Borrower Outreach During Foreclosure
• E-3.2-07, Impact of Engagement with a Mortgage Assistance Fund Program Provider
• E-3.2-08, Processing Reinstatements During Foreclosure
• E-3.2-09, Conducting Foreclosure Proceedings
• E-3.2-10, Paying Certain Expenses During the Foreclosure Process
• E-3.2-11, Collecting Under an Assignment of Rents
• E-3.2-12, Performing Property Preservation During Foreclosure Proceedings
• E-3.2-13, Addressing Title Defects Generally
• E-3.2-14, Addressing Title Defects for Bifurcated Mortgage Loans
• E-3.2-15, Allowable Time Frames for Completing Foreclosure
• E-3.3-01, Completing Preforeclosure Sale Review
• E-3.3-02, Certifying the Status of Workout Negotiations Prior to Foreclosure Sale
• E-3.3-03, Inspecting Properties Prior to Foreclosure Sale
• E-3.3-04, Marketing the Foreclosure Sale and Using Foreclosure Auction Services
• E-3.3-05, Issuing Bidding Instructions
• E-3.3-06, Handling a Suspension or Reduction of the Redemption Period
• E-3.3-07, Pursuing a Deficiency Judgment
• E-3.4-01, Suspending Foreclosure Proceedings for Workout Negotiations
• E-3.4-02, Canceling the Foreclosure Sale for a Completed Workout
• E-3.5-01, Foreclosure of a Property Securing an MBS Mortgage Loan
• E-3.5-02, Handling Third-Party Sales
• E-3.5-03, Providing Evidence of Title
• E-4.1-01, Notifying Fannie Mae of an Acquired Property
• E-4.1-02, Eliminations and Rescissions of Foreclosure Sales
• E-4.2-01, Completing Conveyance Documents
• E-4.2-02, Handling Reconveyance to the Insurer or Guarantor
• E-4.3-01, Managing the Property Post-Foreclosure Sale
• E-4.3-02, Inspecting Properties Post-Foreclosure Sale
• E-4.3-03, The Broker's, Agent's, or Property Management Company's Responsibilities
• E-4.3-04, Handling Eviction Proceedings
• E-4.4-01, Continuing or Canceling Property Insurance Coverage
• E-4.4-02, Remitting Property Insurance Settlement Proceeds or Unearned Premium Refunds
• E-4.4-03, Canceling Flood Insurance Coverage for Acquired Properties
• E-4.4-04, Remitting Flood Insurance Settlement Proceeds or Unearned Premium Refunds
• E-4.5-01, Filing MI Claims for Conventional Mortgage Loans or for Other Mortgage Loans for which Fannie Mae Bears the Risk of Loss
• E-4.5-02, Filing MI Claims for FHA Mortgage Loans
• E-4.5-03, Filing MI Claims for FHA Coinsured Mortgage Loans
• E-4.5-04, Filing MI Claims for FHA Title I Loans
• E-4.5-05, Filing MI Claims for HUD Section 184 Mortgage Loans
• E-4.5-06, Filing MI Claims for VA Mortgage Loans
• E-4.5-07, Filing MI Claims for RD Mortgage Loans
• E-5-01, Requesting Reimbursement for Expenses
• E-5-02, Servicer Responsibilities Prior to Requesting Reimbursement of Attorney Fees and Costs
• E-5-03, Allowable Bankruptcy Fees
• E-5-04, Allowable Foreclosure Fees
• E-5-05, Reimbursing Law Firms/Reimbursement of Uncollected Fees, Costs or Advances
• E-5-06, Technology Fees and Electronic Invoicing
• E-5-07, Other Reimbursable Default-Related Legal Expenses
• F-1-01, Servicing ARM Loans
• F-1-02, Escrow, Taxes, Assessments, and Insurance
• F-1-03, Establishing and Implementing Custodial Accounts
• F-1-04, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan
• F-1-05, Expense Reimbursement
• F-1-06, Filing an MI Claim for a Liquidated Mortgage Loan or Acquired Property
• F-1-07, Handling Property Forfeitures and Seizures
• F-1-08, Managing Foreclosure Proceedings
• F-1-09, Processing Mortgage Loan Payments and Payoffs
• F-1-10, Obtaining and Executing Legal Documents
• F-1-11, Post-Delivery Servicing Transfers
• F-1-12, Preparing to Implement a Workout Option
• F-1-13, Processing a Fannie Mae Mortgage Release (Deed-In-Lieu of Foreclosure)
• F-1-14, Processing a Fannie Mae Short Sale
• F-1-15, Processing a Government Mortgage Loan Modification
• F-1-16, Processing a Repayment Plan
• F-1-17, Processing a Transfer of Ownership
• F-1-18, Processing a Workout Incentive Fee
• F-1-19, Processing a Military Indulgence
• F-1-20, Remitting and Accounting to Fannie Mae
• F-1-21, Reporting a Delinquent Mortgage Loan via Fannie Mae’s Servicing Solutions System
• F-1-22, Reporting a Workout Option via Fannie Mae’s Servicing Solutions System
• F-1-23, Reporting to Third Parties
• F-1-24, Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System
• F-1-25, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan
• F-1-26, Servicing eMortgages
• F-1-27, Processing a Fannie Mae Flex Modification
• F-1-28, Reviewing a Transfer of Ownership for Credit and Financial Capacity
• F-2-01, Bankruptcy Referral and Completion Timelines
• F-2-02, Incentive Fees for Workout Options
• F-2-03, Compensatory Fee Calculation Examples
• F-2-04, Firm Minimum Requirements
• F-2-05, Historical Yield Differential Adjustment Provisions
• F-2-06, Mortgage Insurer Delegations for Workout Options
• F-2-07, Reporting the Principal Amount for Mortgage Loans with Principal Forbearance
• F-2-08, Servicing Fees for MBS Mortgage Loans
• F-2-09, Servicing Fees for Portfolio Mortgage Loans
• F-2-10, Fannie Mae’s Workout Hierarchy
• F-3-01, Acronyms and Glossary of Defined Terms: A
• F-3-02, Acronyms and Glossary of Defined Terms: B
• F-3-03, Acronyms and Glossary of Defined Terms: C
• F-3-04, Acronyms and Glossary of Defined Terms: D
• F-3-05, Acronyms and Glossary of Defined Terms: E
• F-3-06, Acronyms and Glossary of Defined Terms: F
• F-3-07, Acronyms and Glossary of Defined Terms: G
• F-3-08, Acronyms and Glossary of Defined Terms: H
• F-3-09, Acronyms and Glossary of Defined Terms: I
• F-3-10, Acronyms and Glossary of Defined Terms: J
• F-3-11, Acronyms and Glossary of Defined Terms: K
• F-3-12, Acronyms and Glossary of Defined Terms: L
• F-3-13, Acronyms and Glossary of Defined Terms: M
• F-3-14, Acronyms and Glossary of Defined Terms: N
• F-3-15, Acronyms and Glossary of Defined Terms: O
• F-3-16, Acronyms and Glossary of Defined Terms: P
• F-3-17, Acronyms and Glossary of Defined Terms: Q
• F-3-18, Acronyms and Glossary of Defined Terms: R
• F-3-19, Acronyms and Glossary of Defined Terms: S
• F-3-20, Acronyms and Glossary of Defined Terms: T
• F-3-21, Acronyms and Glossary of Defined Terms: U
• F-3-22, Acronyms and Glossary of Defined Terms: V
• F-3-23, Acronyms and Glossary of Defined Terms: W
• F-3-24, Acronyms and Glossary of Defined Terms: X
• F-3-25, Acronyms and Glossary of Defined Terms: Y
• F-3-26, Acronyms and Glossary of Defined Terms: Z
• F-4-01, References to Fannie Mae's Website
• F-4-02, List of Contacts
• F-4-03, List of Lender Contracts

Assignment Of Mortgage

Unlock the potential of Assignment of Mortgage with the comprehensive Lark glossary guide. Explore essential terms and concepts to excel in the real estate realm with Lark solutions.

In the world of real estate, the Assignment of Mortgage plays a crucial role. It is a legal and financial process that involves the transfer of a mortgage from one party to another. This process has significant implications for various stakeholders in the real estate ecosystem, including lenders, borrowers, and investors. Understanding the Assignment of Mortgage is essential for real estate businesses to navigate the intricacies of the industry successfully.

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Define assignment of mortgage and its relevance in real estate

The Assignment of Mortgage refers to the transfer of the rights and obligations of a mortgage from the original lender to another party. This transfer typically occurs when the original lender wants to sell the mortgage to another entity, such as an investor or a financial institution. The new party becomes the new mortgagee and assumes the rights and responsibilities associated with the mortgage.

In the real estate landscape, the Assignment of Mortgage is highly relevant for various reasons. Firstly, it allows lenders to mitigate risk by transferring the mortgage to another entity that may be better equipped to handle the loan. This transfer can help lenders free up capital and reduce their exposure to potential defaults.

Additionally, the Assignment of Mortgage plays a crucial role in the secondary mortgage market. It allows investors to buy and sell mortgages, providing liquidity to the market. This liquidity is essential for ensuring a steady flow of funds for new mortgage originations.

Significance of assignment of mortgage in real estate

Understanding the Assignment of Mortgage is crucial for real estate businesses for several reasons. Firstly, it enables lenders to manage and diversify their mortgage portfolios effectively. By being able to transfer mortgages to other parties, lenders can optimize their risk exposure and ensure a more balanced loan portfolio.

Moreover, the Assignment of Mortgage allows borrowers to experience minimal disruptions when their mortgages are sold. The terms and conditions of the mortgage remain the same, and borrowers continue to make payments to the new mortgagee. This stability is vital for maintaining trust and confidence in the real estate market.

Investors also benefit from the Assignment of Mortgage as it provides them with opportunities to generate returns. By purchasing mortgages at a discount, investors can earn interest income and potentially profit from the appreciation of the underlying real estate assets.

Who benefits from assignment of mortgage in real estate?

The Assignment of Mortgage benefits various stakeholders in the real estate ecosystem. Lenders, for instance, benefit by being able to transfer mortgages to reduce risk and optimize their loan portfolios. Borrowers benefit from a seamless transition when their mortgages are assigned, ensuring continuity in their repayment obligations.

Investors also benefit from the Assignment of Mortgage as it allows them to participate in the real estate market without directly owning properties. By purchasing mortgages, investors can earn interest income and potentially profit from the performance of the underlying real estate assets.

Additionally, the Assignment of Mortgage benefits the secondary mortgage market as a whole. It provides liquidity and fosters a more efficient allocation of capital, allowing lenders to originate new mortgages and borrowers to access financing.

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Practical implications and why it matters for real estate businesses

Understanding the practical implications of the Assignment of Mortgage is crucial for real estate businesses. Firstly, it allows lenders to manage their risk exposure effectively. By transferring mortgages to other parties, lenders can reduce their exposure to potential defaults and diversify their loan portfolios.

Furthermore, the Assignment of Mortgage can impact the terms and conditions of a mortgage. When a mortgage is assigned, the new mortgagee may have different policies and procedures, which could affect how the mortgage is serviced. Real estate businesses must be aware of these changes to ensure smooth operations and maintain customer satisfaction.

Real estate businesses also need to consider the legal and regulatory aspects of the Assignment of Mortgage. Each jurisdiction may have specific laws and requirements governing the transfer of mortgages. Failing to comply with these regulations can lead to legal and financial consequences.

To navigate the practical implications of the Assignment of Mortgage, real estate businesses should adopt best practices and strategies to ensure effective implementation.

Best practices when considering assignment of mortgage in real estate and why it matters

Implementing the Assignment of Mortgage effectively requires adherence to best practices. Here are some key strategies to consider:

Conduct thorough due diligence: Before assigning a mortgage, it is essential to conduct a comprehensive review of the borrower's creditworthiness, property valuation, and other relevant factors. This due diligence helps minimize the risk of assigning a mortgage with potential issues.

Ensure proper documentation: Real estate businesses should ensure that all necessary legal documents are properly prepared and executed when assigning a mortgage. This documentation is crucial for establishing the validity and enforceability of the assignment.

Communicate with all parties involved: Effective communication is vital when assigning a mortgage. Real estate businesses should maintain clear and open lines of communication with the original lender, the new mortgagee, and the borrower. This communication helps ensure a smooth transition and minimizes misunderstandings.

By following these best practices, real estate businesses can mitigate risks and maximize the benefits of the Assignment of Mortgage.

Actionable tips for leveraging assignment of mortgage in real estate

Here are some actionable tips for real estate businesses looking to leverage the Assignment of Mortgage:

Best Tip 1: Strengthen Relationships with Lenders and Investors

Building strong relationships with lenders and investors can provide access to a broader network of potential assignees. Maintaining these relationships through regular communication and collaboration can increase the likelihood of successful assignments.

Best Tip 2: Stay Updated on Legal and Regulatory Changes

The legal and regulatory landscape surrounding the Assignment of Mortgage can change over time. Real estate businesses should stay informed about any updates to ensure compliance and avoid legal issues.

Best Tip 3: Provide Transparent and Timely Communication to Borrowers

When a mortgage is assigned, it is crucial to communicate the change to the borrower promptly and transparently. Providing clear information about the assignment and addressing any concerns or questions can help maintain trust and minimize disruptions.

By implementing these tips, real estate businesses can leverage the Assignment of Mortgage effectively.

Related terms and concepts to assignment of mortgage in real estate

To fully understand the Assignment of Mortgage, it is essential to be familiar with related terms and concepts. Here are a few:

Related Term or Concept 1: Mortgage Assignment Agreement

A mortgage assignment agreement is a legal contract that outlines the transfer of a mortgage from one party to another. It includes details such as the names of the parties involved, the terms of the assignment, and any conditions or restrictions.

Related Term or Concept 2: Secondary Mortgage Market

The secondary mortgage market refers to the buying and selling of mortgages after they have been originated. This market provides liquidity and allows lenders to sell mortgages to investors, freeing up capital for new loan originations.

Related Term or Concept 3: Mortgage Servicing

Mortgage servicing involves the administration of a mortgage after it has been originated. This includes collecting payments, managing escrow accounts, and handling any other duties related to the mortgage.

Understanding these related terms and concepts can provide a broader perspective on the Assignment of Mortgage.

The Assignment of Mortgage plays a vital role in the real estate landscape. It allows lenders to manage risk, investors to generate returns, and borrowers to experience minimal disruptions. Real estate businesses must understand the practical implications and best practices associated with the Assignment of Mortgage to navigate the industry successfully. By leveraging this knowledge and continuously adapting to the dynamic real estate market, businesses can thrive in this complex ecosystem.

What is the Assignment of Mortgage?

The Assignment of Mortgage refers to the transfer of the rights and obligations of a mortgage from one party to another. It allows lenders to sell mortgages to investors or financial institutions, providing liquidity to the market.

How does the Assignment of Mortgage benefit real estate businesses?

The Assignment of Mortgage benefits real estate businesses by allowing lenders to manage risk, investors to generate returns, and borrowers to experience minimal disruptions. It also fosters liquidity in the secondary mortgage market.

Can the terms of a mortgage change after it is assigned?

In most cases, the terms and conditions of a mortgage remain the same after it is assigned. However, the new mortgagee may have different policies and procedures for servicing the mortgage, which could impact how it is managed.

What are some best practices for implementing the Assignment of Mortgage?

Some best practices for implementing the Assignment of Mortgage include conducting thorough due diligence, ensuring proper documentation, and maintaining clear communication with all parties involved.

What is the Mortgage Assignment Agreement?

The Mortgage Assignment Agreement is a legal contract that outlines the transfer of a mortgage from one party to another. It includes details such as the names of the parties involved, the terms of the assignment, and any conditions or restrictions.

What is the secondary mortgage market?

The secondary mortgage market refers to the buying and selling of mortgages after they have been originated. It provides liquidity and allows lenders to sell mortgages to investors, freeing up capital for new loan originations.

What is mortgage servicing?

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Travel Tips to Kabardino-Balkaria: More than Mt. Elbrus!

If you’ve traveled to the North Caucasus before, there is a good chance you’ve already been to Kabardino-Balkaria, and you didn’t even know it!  Kabardino-Balkaria lies in the center of the North Caucasus region, is home to Mt. Elbrus, but more than that is a treasure chest of travel possibilities.  Here is our guide to traveling through the republic of Kabardino-Balkaria, or 9 travel tips to this beautiful land:

1. How do I get there?

Kabardino-Balkaria hosts a large number of both foreign and Russian travelers every year, and has an improving infrastructure able to handle the incoming masses.  Let’s start with the obvious.  You might be a mountain climber or skier coming to enjoy the slopes of Mt. Elbrus.  That means you’re likely arriving on an airplane to Russia.  Here are your travel options:

A. Plane – We advise you fly into the Mineralni Vodi (MRV) airport in the Stavropol Region, which is about 45 minutes from the border of Kabardino-Balkaria.  MRV is the largest airport in the North Caucasus, and has daily direct flights to and from all 3 airpots in Moscow (SVO, DME, and VKO), direct flights from St. Petersburg, and several international flight routes as well, including from Istanbul, Dubai, Greece, Tel Aviv, and Bishkek.  The MRV airport has a growing infrastructure and is the most obvious choice to fly into if going to Elbrus.  From MRV, it’s a 2 hr. drive to Nalchik, and a 3.5 hr. drive to Mt. Elbrus.

That being said, the capital of Kabardino-Balkaria, Nalchik (NAL), also has a small regional airport with a daily flight to/from Moscow as well as weekly flights to Istanbul. As is to be expected in most smaller, regional airports around Russia, the service standard at a small airport like this will be minimal.  As a result, we recommend you flying in and out of MRV if able.  It’s a 2 hr. drive to Elbrus from Nalchik.  You can also fly into other regional airports which are 2 hrs. from Nalchik, such as OGZ in North Ossetia (Vladikavkaz) or IGT in Ingushetia (Magas).

B.  Car/Public Transport – If you have a car, are using a taxi, or are hitch-hiking your way to Kabardino-Balkaria, the region is accessible by a variety of roads and vehicles.  A major Russian federal highway E50 runs through Pyatigorsk into Kabardino-Balkaria, and can take you towards Mt. Elbrus, Nalchik, and deeper into the North Caucasus.  There are daily mini-buses, or “marshrutkas”, that travel to Nalchik from Pyatigorsk, Vladikavkaz, Grozny, and Magas, if you’re coming from a neighboring republic.  From the main Nalchik bus station, there is a marshrutka that goes to Terskol (i.e. Mt. Elbrus) daily around 12:30 pm; for that matter,  marshrutkas run daily into every valley of this beautiful republic.  For the seasoned international traveler, you can drive from the country of Georgia up the famed “Georgian Military Highway” through the heart of the Caucasus Mountains, cross the border into Russia at the “Verkhni Lars” border stop, and be in Nalchik in about 2.5 hours as well. 

Anyone traveling on their own should download the “Yandex” taxi app, which is Russia’s version of Uber, and has a very user-friendly app with affordable prices.  In smaller villages/towns where Yandex’s service doesn’t reach, just ask a local and they’ll direct you to a friend or relative who can taxi you where you need to go!

C.  Train – Kabardino-Balkaria is also very accessible by the famous cross-country Russian train system if that’s your preferred method of travel.  Almost all trains to the North Caucasus pass through Mineralni Vodi in the Stavropol region to the north, so make sure wherever you are coming from, Mineralni Vodi is one of the stops.  Despite Nalchik having a train station, the city is about 45 minutes from the main railway route that runs diagonal through the North Caucasus, and as a result it’s a bit convoluted to get a train directly to Nalchik.  That being said, the town Prokhladni is a regular stop on trains going to/coming from Baku, Makhachkala, Grozny, Nazran, and Vladikavkaz, so you can always hop off there and find your way by public transport or taxi.

2.  What are the best places to stay?

This list could get exhaustive, fast. 🙂  Let’s first look at an overview of the republic’s geography, followed by hotel recommendations:

A. Nalchik – This is the capital city of Kabardino-Balkaria, with a population of around 250,000.  Nalchik is growing and new, modern hotels are being built regularly.  Here are some of our recommendations:

-Modern and comfortable:  Azimut , Butik Otel

-Budget with less frills:  Hotel Rossia , Korona

You could comfortably spend a week in Nalchik, while doing day trips into Kabardino-Balkaria’s beautiful mountain valleys.

B.  Baksan Valley – This is the most traveled road in Kabardino-Balkaria, the road to Mt. Elbrus.  If you have questions about its safety because of travel warnings, please see our detailed blog here of the drive to erase any doubts or fears.  Needless to say, because of the draw of Mt. Elbrus, there are a huge variety of lodging options at the end of this valley, from 4-star to mid-range to budget to hostel.  Here are just a few we’ll recommend from our experience:

-Modern and comfortable 4-star-ish:  Azau Star , Kristall 139

-Budget with less frills 3-star-ish:   Laguna , Povorot

If you’re a mountain climber with your sites set on the summit of Elbrus, you’ll have to spend at least 3-4 nights at Elbrus’s famous base camp at 13,000 feet.  The “barrel huts” are not easy to book directly with, and we highly recommend you do your climb (and hence, have your bookings handled) through a trusted climbing company.  Here are two shelters at base camp we recommend:

-Modern and comfortable:  Leaprus

-Budget with less frills:  Heart of Elbrus Lodge

If you’re interested in climbing Mt. Elbrus and staying in these barrel huts, click  here  to see our climbing itineraries, pricing, and group dates.

C.  Chegem Valley – Chegem Valley is the adjacent valley to Elbrus’s Baksan Valley, and is famous for its beautiful waterfalls as well as being Russia’s top paragliding location.  The “ Paradrome ” has modest accommodations for those wanting to get to know this beautiful valley for a longer period of time.

D.  Upper Balkaria, or Cherek Valley – This is another beautiful mountain gorge not too far from Nalchik.  There is an authentic lodging complex in Upper Balkaria called Tau-El, with amazing local food for meals as well.

E.  Border Zone lodging – Several of Kabardino-Balkaria’s mountain gorges run into the border zone with neighboring country Georgia, i.e. an area that foreigners cannot enter without a special permit from the local government (often taking 2 months to receive).  There is a famous mountaineering lodge in Bezengi Valley, where several generations of Russian mountain climbers have honed their craft in the Caucasus Mountains.  Perpendicular to Baksan Valley (about 25 minutes from the base of Mt. Elbrus) is Adyr-Suu Valley, where there is a lodge for back-country skiers to stay, while trying their hands (and feet!) on the untouched snow of that valley.  Both these valleys require border permits for foreigners, but are possible to access for the more adventurous!

3.  Top cities to visit?

Most locals would agree that Nalchik is the main city of significance to visit in Kabardino-Balkaria, but let’s be honest, even more would say, “Just go to the mountains!”  Tirnauz is the capital of the Elbrus district, and is an interesting town to spend some time in, with its unique location in the mountains and place in Soviet history as a once-booming mining town.  The main thing to consider in visiting Nalchik and other cities in the lowlands, is the chance to experience Kabardian culture and food.  Whereas the deeper you go into the valleys, the more you’ll encounter Balkar culture and food.

4.  Best local foods to try?

There are 3 types of food that come to mind, when spending time in Kabardino-Balkaria:

A. Khychiny – This is one of the staple national dishes of the Balkar people, and what you’ll inevitably be served if guests of local Balkars.  It’s a thin buttery flat bread, sometimes cooked with fillings of cottage cheese, fresh greens, or potatoes.  It is often slathered in butter, but wow is that some tasty greasy goodness! 🙂

B.  Shashlik – Shashlik is a MUST for any visit anywhere in the North Caucasus!  Most people would agree that it’s the national food of the entire region.  Shashlik is meat shish kabobs; while pork and turkey can be found in some parts of the Caucasus, lamb or chicken are the preferred shashlik meats of choice in Kabardino-Balkaria. 

C.  Soup – No matter where you are in Russia, you’re sure to find a local soup that people love.  Kabardino-Balkaria is no different.  Especially in the winter months in the mountain valleys, there’s nothing better than to come inside from the cold weather and warm your body up to a bowl of hearty Caucasus soup.  Whether Georgian kharcho or local Balkar lakhman, make sure to try your hand at one of these soups with a side of fresh baked bread/lavash!

5.  Top Hole-In-The-Wall restaurants:

Of course, for a republic of this size, we’re bound to leave at least a few great local joints off our list, but here are a few to get you started. ***Note:  Restaurants in the North Caucasus are much better known for their food than their service, so prepare for tasty food, but manage your expectations about service:

-Elbrus – Kogutai Restaurant at Mt. Cheget – While this isn’t a hole-in-the-wall restaurant per se, it’s one of many to choose from in the Cheget tourist village, and we have found them to provide consistently good food and service.  Kogutai has a nice interior, and maybe most important, an English-language menu with good pictures. 🙂  There also is a nice outdoor patio with fantastic views of the surrounding mountains.

-Nalchik #1 – Tameris Restaurant – This is a cafe with a relaxed atmosphere in the capital Nalchik.  Local tour company Elbrus Elevation has taken foreign groups there on multiple occasions and always had good experiences.  Address is ul. Kuliyeva 3. 

-Nalchik #2 – Cafe-Bar Oasis – You have to know where this restaurant is to find it, but once inside, you won’t regret it!  There is a unique cafeteria-style ordering process, that includes several dishes being cooked on the spot once ordered.  You can sample local Kabardian dishes here.  The seating area is very modern and a pleasant atmosphere to have a meal in.  Address is ul. Kuliyeva 2. 

-Upper Balkaria – Tau-El Restaurant – This is the restaurant part of the Tau-El Tourist Complex in Upper Balkaria.  Whether spending the night or just passing through, make sure to stop here for a meal!

6.  Must-See Sites

This republic is so chock full of “must-see” destinations, it’s impossible to narrow the list down.  Here are just a few suggestions to get you started: (***Mt. Elbrus is a no-brainer and we’re assuming that’s on your list)

A. El-Tyubu and Paradrome – This is an amazing area towards the end of Chegem Valley.  Many tourists visit the famous Chegem Waterfalls and don’t drive any further down this gorge, which really is a shame.  El-Tyubu is a picturesque Balkar village with several historical sites to see, including some ancient mausoleums.  The real gem of the area, though, is the Paradrome , which is Russia’s premier paragliding destination.  The combination of the scenic surrounding mountains and constant winds produces almost daily conditions to sail through the beautiful Caucasus sky.  Highly recommend!

B.  Upper Balkaria – Also known as Cherek Valley, the entire drive to the actual village of Upper Balkaria is one big destination.  First, you can spend time at the 3 consecutive “ Blue Lakes ”, one of which is one of Russia’s deepest lakes with an underground spring.  Then, the drive itself becomes an adventure, as you pass by steep rock walls with a huge drop-off on the other side.  If you’re able to walk this part of the road, that is a bonus!  Once you’ve made your way through the valley walls, the region opens up into a beautiful panoramic view.  Many years ago, there were multiple villages in this region, but they’ve since been condensed into one main village.  You can see some of the ancient Balkar towers that their ancestors used to live in as well.

C.  Djili-Suu – Although hard to pronounce and not easy to get to, Djili-Suu is one of those places in the North Caucasus that people rave about that you “have to” visit.  It’s actually on the North side of Mt. Elbrus, and more accessible from the Mineral Waters region (2 hrs. from Kislovodsk).  The base camp for Elbrus climbers summiting the mountain from the North side is at Djili-Suu.  This area is famous in Russia for its numerous natural healing springs, as well as unique climate conditions that make for beneficial, long holidays for seeking a respite from their daily grind.  There are wide swaths of land available for camping, with probably the most unrivaled views of Mt. Elbrus in the North Caucasus.  Make sure to check this out!

7.  Off-the-beaten path destinations

A. King’s Waterfalls (Tsarskie), or Gedmisht – Probably the valley in Kabardino-Balkaria with the least amount of hype is the Malka Valley, which is the northernmost valley and mainly runs through the Kabardian lowlands.  At the point where the villages end, though (Khabas), the asphalt turns into dirt and the hills start to rise, culminating with the incredible King’s Waterfalls, or as one friend put it, Avatar Waterfalls.  These stunning waterfalls are best visited in the early summer, when everything is lush green and the water flow is strong, with many streams of water flowing down the earth’s surface.  The different colors are incredible and it’s hard to look away.  Once you’ve enjoyed the waterfalls, enjoy a meal of shashlik at one of the nearby lunch huts.  Having an off-road vehicle is ideal to visit these falls, but worth the time and effort!

B.  One-seater chair lift at Elbrus – As the infrastructure at Mt. Elbrus has modernized, some of the more “authentic” experiences have gone to the way-side.  This is one experience still available, though!  From the 2nd (11,000 ft.) to 3rd level (12,500 ft.) of Mt. Elbrus (whether skiing, going to base camp, or just touring), there is a single-seater chair lift for 100 rubles each way (less than $2).  This is an amazing experience if you have the time.  It’s 8-10 minutes each way, and a surreal experience of the majestic Caucasus mountain range surrounding you, skiers silently passing you by underneath, and in general enjoying the silent expanse of nature all around.  The chair lifts are from the Soviet times and so it feels like something from a different era.  For mountain climbers, the newer group cable car gives better access to most of base camp, but several huts are pretty close to this chair lift, so it still may be a good option for you.

C.  Abandoned Mines above Tirnauz – Tirnauz is about 1 hr. from Mt. Elbrus, and a town everyone drives through to and from the mountain.  Although today it looks old and half-abandoned, it was a booming mining town in the 20th century.  About a 45-minute drive above the city with an off-road vehicle, you can see the remains of the mining operations.  Learning about this history combined with the breath-taking views of the Baksan Valley and even into Georgia, you’ll wonder why more people aren’t visiting this place.  This is a great spot to see eagles soaring in the sky, as well as admire the Soviet city plan of Tirnauz from above.

8.  What do I need border zone passes to visit?

In Russia, any area within 5-10 km of a neighboring country, without a clearly delineated border (i.e. in the mountains) is considered a special border zone, and patrolled by Russian border guards.  This area IS accessible to all Russian citizens with their passports, but is NOT legally accessible to foreign citizens UNLESS you have a special permit from the FSB (Federal Security Bureau).  These permits are accessible, either through a tour operator or local friend, but require you to submit your application 45-60 days in advance.

Areas in Kabardino-Balkaria that are worth a visit if you have a border zone pass:

A.  Bezengi Wall – This is at the end of the Bezengi Valley, and holds a place of lore among Russian mountain climbers.  Many mountain guides go through training in this valley.  Five of the Caucasus Mountain’ range’s highest seven peaks are a part of the Bezengi Wall, so you can imagine the draw it has for climbers. There are great areas for trekking and camping in this area. 

B.  Adyr-Suu Gorge – This remote valley runs perpendicular to Baksan Valley and is about 25 minutes from the base of Mt. Elbrus.  It’s marked at the entrance by a relic of the past, a car lift from Soviet days that auto-cranks your car (and you) about 50 meters up the mountain.  After 45-60 minutes of driving on gravel road, the gorge opens up into a flat valley with a beautiful view of the surrounding mountains.  The Adyr-Suu Alpine Lodge is at the end of this valley and where back-country skiers base out of during the acclimatization phase of their Mt. Elbrus ski tours.  This is truly a place where you can experience untouched powder!

C.  Mt. Cheget (Elbrus) – Cheget is a neighboring mountain to Mt. Elbrus and where many climbers will acclimatize, both at its base and while doing some hikes.  It also is famous in Russia for its free-ride terrain for more experienced skiers.  Standard access to the chair lifts and mountain are available to all (i.e. mountain climbers don’t need to worry about accidentally crossing into the zone), but anyone wanting to summit the peak of Cheget OR visit the beautiful Cheget Lake needs a border permit. 

Foreigners violating the border zone areas is considered a serious offense in Russia; make sure to do your due diligence if wanting to visit one of these areas!  We highly recommend using a local tour operator and always traveling with a local person if visiting one of these areas.

9.  Any cultural “do’s” or “don’t’s” to be aware of

Kabardino-Balkaria is a fascinating republic with a combination of traditional and modern society.  The more you interact with local people, the more you’ll see a mixture of Muslim faith, post-Soviet mentality, and ancient local traditions all wrapped together.   

Kabardians mainly live in the lowlands (Nalchik, Baksan, and lowland villages), while Balkars primarily live in the mountain valleys (Elbrus, Chegem, Upper Balkaria, etc.).  There is a large population of Russians in the region as well.  Foreigners visit every area of the region regularly, and so local people are used to and will welcome your presence.

Come with an open mind to learn about these peoples, their traditions, and their land.  You won’t regret your trip to Kabardino-Balkaria!

***Want to learn more?  Here are several self-published resources from the podcast “ CaucasTalk ” related to Kabardino-Balkaria:

– Travel Tips to Kabardino-Balkaria (audio version of this blog)

– History of Mt. Elbrus (Part 1)

– History of Mt. Elbrus (Part 2)

– Interview with Local Elbrus guide

– Climbing Elbrus: Interview with American guide

– Who are the Kabardians? (Part 1)

– Who are the Kabardians? (Part 2)

– Skiing in the North Caucasus (Elbrus and more)

READY TO EXPERIENCE KABARDINO-BALKARIA FOR YOURSELF?

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Travel Information

• We no longer offer travel services to Russia. See Caucasus Quest Tours for new destinations
• Is it Safe to Travel to the Caucasus in 2024?
• Climbing Kazbek & Kilimanjaro: Comparing two 5,000+ meter peaks
• How to Train to climb Mt. Kazbek in Georgia

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ALL Travel Services to Russia and Mt. Elbrus have been indefinitely suspended as of Feb. 2022.

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When the ground slips out from under the feet

Villagers from Kabardino-Balkaria are speaking out openly against what they describe as a gross violation of Russian law, including the constitution, which guarantees them the right to use the land. Today, the lion’s share of former collective farms and public land in Kabardino-Balkaria is owned by high-ranking officials and their relatives.

For several years, residents of Nartan, a village in the Chegem District of Kabardino-Balkaria, have been fighting to regain land that was taken away from them by a group of people acting in their own interests, with the protection of the state.

After the collapse of the Soviet Union and its collective farming system, land in Nartan which was once a community possession organised in a local collective farm was arbitrarily given to the newly created ‘Experimental Production Farm (OPKh) Nartan’ and declared federal property. However, there is no documentary evidence that there was ever any reorganisation of the collective farm.

According to registration documents, the function of OPKh Nartan is to cultivate locally adapted corn and to distribute it to farms in Chegem District, as well as conducting research. However, since 1992, nothing has been grown on the farm and no research has been conducted.

In 2010, the farm declared bankruptcy with debts amounting to ₽14 million ($240,000). Bankruptcy proceedings have already lasted for more than six years. ‘Why? Because the bankruptcy trustee delays bids instead of organising an auction’, says Adam Medaliyev, a villager from Nartan.

Medaliyev explains that the bankruptcy trustee has been violating the law on state municipal enterprises. Moreover, the fee charged to subtenants is several times higher than the amount that is being taxed. Why, with this violation — and many others — has the bankruptcy trustee been left unpunished for so many years? Medaliyev believes that he’s being protected by corrupt officials from the region’s administration, which is fused with business structures. In particular, he cites S A Ashinov — head of the regional Federal Property Management Agency — who is under investigation for allegedly crossing paths with law enforcement regarding OPKh Nartan. Ashinov faces up to four years in prison.

Meanwhile, large plots of 400–1,500 hectares are being subleased to people associated with the corrupt scheme. There is no land for local people, who want to rent or subrent small plots of 2–5 hectares. According to Medaliyev, all of this is already under investigation and he hopes for a positive outcome.

‘Even before the auctions, the land was transferred to large tenants — employees of the municipality or influential officials’, Medaliyev says. ‘Now auctions are being held, but they auction too large plots (100–1,000 hectares) and they put forward conditions for 100% prepayment for the land. A farmer isn’t able to rent a large area and isn’t able to pay 100% of the price outright. Therefore, we believe that the auctions in this form are not a panacea.’

Medaliyev says that the major tenants are government officials from the district administration, in the Parliament of Kabardino–Balkaria, and in other local power structures, but the land is formally registered to nominees. Everyone knows about this, but it is impossible to prove their involvement in court. Meanwhile, people and their families are left without land, and consequently, without work or a livelihood.

‘We, the residents of the rural settlement of Nartan, believe that we are being illegally deprived of the opportunity to use public collective land’, Medaliyev continues.

The land is slipping from under our feet, and not only for farmers in the Chegem District of Kabardino–Balkaria. Over recent years, according to land-deprived farmer and horse-breeder Ibragim Yaganov, a group of people using practically the same scheme have caused other farms to go bankrupt before selling them off, including pedigree stud farm, Kabardinsky, and the Kotlyarevsky collective farm in Maysky Region.

In 2013, there was a confrontation between farmers and local authorities in a number of settlements of Terek District. The problem was the same — peasants could not use the land. Collective farmland was handed to a small group of long-term tenants in the 1990s (for 49 years with the right to prolong the lease); this way they became large landowners. This has left people from the villages of Krasnoarmeyskoye, Verkhny Akbash, Verkhny Kurp, and Botashi, without livelihoods.

In the majority of villages in the Kabardino-Balkaria, only rural teachers, doctors, and administration officials have means to support their livelihoods, as they receive salaries. The rest are unemployed and the land is the only means for them to feed themselves and their families.

One villager from Verkhny Kurp, Askerbi Ashkhotov, describes the plight of the villagers.

‘Many people don’t even have money to buy bread in the shop. They also have no means to keep livestock. Young people leave the village in order to find employment opportunities in other regions of the republic or Russia. As labourers, they work under scorching sun for sums such as ₽500 ($9) a day. Under such conditions, their health quickly deteriorates, and the money is only enough for a short while. People who leave to work in Russia don’t always return home with the money they earned’, Askerbi says.

‘How many Kabardians were already brought home from such work placements in coffins?’ Askerbi asks rhetorically. ‘No-one knows exactly. Every year our dead children are being returned home, and those who manage to return safe and sound say that in Russia we are ‘beasts’, ‘blacks’, ‘ khach ’ [a Russian ethnic slur towards Caucasians], while no-one needs them in their homeland.’

Residents of Terek District believe that the landowners deliberately poison the cattle farmers keep them in their backyards. The most recent outbreak, of moist dermatitis, destroyed almost all privately owned livestock in the district. They believe that this is done to stop residents from demanding pasturelands.

One resident of the village of Verkhny Akbash, Murat Aksorov has been fighting for six years to be allocated land. Despite being a veteran, handicapped during the Afghan war, he’s unable to receive any.

‘All this land belongs to the officials of Terek District administration — individuals, who are not citizens of Kabardino–Balkaria — as well as MPs of the republic’s parliament. Each of them leases (and actually owns) plots of 500 hectares or more. These include the police chief of Terek District and other bigwigs. Leases are registered, of course, to third parties. The real owners of this once collective land are closely related to each other and to republic-level officials. It’s a real mafia! In this situation, Federal Law #131 on the principles of local self-government doesn’t work at all. People from the district administration, in order to protect their personal interests, use all means in order to keep people obedient to them in local councils’, Aksorov says.

For many years Aksorov did his best by all means at his disposal to get at least five hectares, but he failed.

‘They just lie to us, lie to our faces and put our applications in the trash’. They hide the dates that auctions are conducted he says. ‘They even burn entire issues of the regional newspaper, Terek , where they usually publish the dates of auctions. They buy the whole edition for ₽56,000 ($1,000) and destroy it, so people willing to take part in the auction wouldn’t find out about it. There is no information available online.’

Oleg Serkov, from the same village as Aksorov, says that the administration feels absolute impunity, they threaten people so that they don’t make claims to the land, while some are seduced with gifts.

‘They use all their administrative resources for it’, Serkov says. ‘Here it is the same as in American Western movies — the law is at the disposal of private interests. Last year, when we decided to work on the land which we thought was ours, we were immediately surrounded by five crews from the State Road Safety Inspection. It seems that at that moment, the regional administration didn’t have any other mobile unit available’, Serkov says.

He believes that the corrupt authorities use mafia-like methods to threaten people. When residents of the villages of Kabardino-Balkaria decided to organise a demonstration in Moscow in order to attract the attention of the central government to their problems, there was an attack on one of the activists of the movement — 65-year-old Anatoly Balkizov. The attackers cracked his knee joints with rubber batons.

Earlier, one of the leaders of the land committee was brutally beaten. One of the locals from the village of Verkhny Akbash in Terek District was shot. He was one of the residents who wanted to declare his right to the land.

According Aksorov, the local government council planned to nominate its own candidates on the eve of the election, but shortly before the ballot, the head of the Department for Combating Extremism of the Russian Interior Ministry in Kabardino-Balkaria met with a group of peasant-activists. This, in his opinion, was a clear demonstration of the capabilities of their opponents. Others were dissuaded, intimidated, or bribed.

‘I was threatened and warned a number of times,’ Aksorov says. ‘They will do anything — they can toss something incriminating in your private car — drugs or a weapon. You have to be particularly careful.’

Nevertheless, farmers from the villages of Terek District plan to start using the lands this spring.

‘What can happen? I try not to think about it’, Aksorov remarks. ‘Whatever happens I will continue fighting for the land, and I am not alone.’

Human rights activist Valery Khatazhukov says that the problem must be solved as soon as possible.

‘There are cases of land appropriation, which causes conflicts translating into an open confrontation. All this is happening because the best land is in the hands of a small group of people, some of whom are officials at different levels. They are lobbying for the interests of the new landowners.’ According to Khatuzhakov, ‘In order to solve this issue, honest government officials and community members need to unite their efforts’.

Aslan is a journalist based in Kabardino-Balkaria.

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