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Real Property • Security Interests in Real Estate
PROP#206
Legal Definition
Both the mortgagee (lender) and the mortgagor (borrower) may transfer their interest in a mortgage, subject to the terms of the mortgage agreement and applicable laws.
Plain English Explanation
When it comes to a mortgage, both the mortgagee (the lender) and the mortgagor (the borrower) can transfer their interests, but there are some rules and limits involved.
(1) The mortgagee (lender) can transfer their interest in the mortgage to someone else. This is called an assignment. The lender essentially sells the mortgage to another party, which means the new party (called the assignee) now becomes the one to collect payments from the borrower. This often happens behind the scenes, and the borrower usually just starts sending payments to a different place.
(2) The mortgagor (borrower) can also transfer their interest in the property (like selling the house), but that doesn’t automatically release them from the mortgage. In many cases, the buyer takes on the mortgage, but the original borrower (seller) might still be on the hook if the buyer defaults, unless the lender agrees to release them from liability.
However, everything depends on the terms of the mortgage agreement and applicable laws. Some mortgage agreements may have clauses that limit or restrict transfers, so it's always important to read the fine print.
(1) The mortgagee (lender) can transfer their interest in the mortgage to someone else. This is called an assignment. The lender essentially sells the mortgage to another party, which means the new party (called the assignee) now becomes the one to collect payments from the borrower. This often happens behind the scenes, and the borrower usually just starts sending payments to a different place.
(2) The mortgagor (borrower) can also transfer their interest in the property (like selling the house), but that doesn’t automatically release them from the mortgage. In many cases, the buyer takes on the mortgage, but the original borrower (seller) might still be on the hook if the buyer defaults, unless the lender agrees to release them from liability.
However, everything depends on the terms of the mortgage agreement and applicable laws. Some mortgage agreements may have clauses that limit or restrict transfers, so it's always important to read the fine print.
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