An assignment of mortgage is the document that transfers your rights under a mortgage to whoever buys your note. You sign it in front of a notary, and it is recorded in the county where the property sits so that the public record shows who now holds the lien.
What it moves, and what it leaves to the endorsement
A seller-financed loan has a promissory note, which is the borrower’s promise to pay, and a mortgage, which secures that promise by giving the note holder a lien: a legal claim on the property if the debt goes unpaid. A sale has to pass both to the buyer. The note travels by endorsement, your signature making it payable to the buyer, written on the note or on an attached page called an allonge. The mortgage travels by assignment. A buyer who received only one of them would have an incomplete claim, so the closing agent collects both together.
What is written on it
An assignment is a short document that generally sets out:
- Your name as the current holder, called the assignor, and the buyer’s name, called the assignee.
- The borrower’s name and the date and amount of the original mortgage.
- The recording reference of the original mortgage, such as the book and page or the instrument number.
- The legal description of the property.
- Your notarized signature.
Every detail has to match the recorded mortgage. A misspelled name or a wrong recording reference can lead the county to reject the document, or leave an error in the record that someone has to correct later.
Why it is recorded
Recording an assignment does what recording a mortgage does: it places the document in the public land records, where title companies and other lenders can see that the buyer now holds the lien. The holder of record is the party a title company asks for a payoff figure when the borrower sells or refinances, and the party that notices about the property are addressed to. Leave the assignment unrecorded and the county goes on showing you as lienholder on a loan you no longer own, which is a risk for the buyer and can send misdirected payoff requests to you years later.
Your part at closing
The assignment is signed with the other closing papers, near the end of selling a note. The buyer, the buyer’s attorney or the title company prepares the form, and you then:
- Check that your name appears exactly as it does on the recorded mortgage.
- Check the borrower’s name, the property description and the recording reference.
- Sign in front of a notary.
- Return it to the closing agent, who holds it until the funds are ready and then sends it for recording.
Earlier transfers that were never recorded
If the note reached you from someone else, by inheritance or by purchase, there should be a recorded assignment for each step between the original lender and you. A missing one leaves a break in the chain of assignments, and the buyer’s title review will stop at it until it is repaired. Raise it when you first describe the note, because tracking down an earlier holder or their estate for a signature takes time that is easier to find before a closing date has been set.
Deeds of trust and land contracts
Many states commonly use a deed of trust in place of a mortgage. The transfer document is then called an assignment of deed of trust. Whatever the differences between a mortgage and a deed of trust, the assignment serves the same purpose and is recorded in the same way.
A land contract is another matter, because the seller generally still holds title to the property. Transferring one generally involves assigning the contract and deeding the seller’s interest, and since practice varies by state, the closing attorney or title company chooses the form.
A check worth doing now
Find your recorded mortgage, or order a copy from the county, and compare the name on it with the name on your note and the name you sign with today. A marriage, a trust or a company formed since the loan was made can leave them different, and you are better off knowing that before a buyer finds it. If the names do differ, say so when you request a price for your note, so the correction can be agreed before anyone drafts the assignment.
Related questions
Is an assignment of mortgage the same as selling the note?
The assignment moves only the lien on the property. The note itself is transferred separately by endorsement, either on the note or on an attached allonge, and a buyer needs both.
Who pays to record the assignment?
It depends on the deal. Your purchase agreement or settlement statement should say whether the buyer or the seller covers the recording charge. Ask before you accept an offer.
What is an assignment of deed of trust?
It is the same kind of document used where the loan is secured by a deed of trust and not a mortgage. It transfers the lender's interest to the buyer and is recorded in the county land records.