Imagine a lender (the mortgagee) decides to pass their rights under a mortgage to a new lender. This is what we call a mortgage assignment. It’s important to note that if the rights were transferred to the borrower (the mortgagor), the mortgage would be extinguished due to the legal principle of merger. Florida law recognizes the ability to assign mortgages through specific statutes, ensuring the assignee (the new lender) can pursue the same remedies and rights that the original lender enjoyed.

How Many Times Can Mortgages Be Assigned?

The mortgage can be assigned multiple times, from one party to another. However, each assignee only inherits the rights that the original lender had. Rights don’t magically expand during an assignment—what you see is what you get.

Intent and Recording: Two Key Factors

For an assignment to be valid, there must be clear intent to assign the mortgage. Additionally, to ensure protection against creditors or bona fide purchasers, the assignment must be recorded according to Florida statutes. Recording the assignment safeguards its validity and prioritization.

The Role of the Note

Every mortgage loan consists of two parts: the note and the mortgage instrument. While the mortgage instrument is often highlighted, the note is the true essence of the debt. You might have heard the phrase, “the mortgage follows the note.” This means that transferring the note also transfers the associated mortgage rights, even if the mortgage instrument hasn’t been explicitly assigned. Simply put, the note is the cornerstone of the mortgage debt.

Why Assigning the Note Matters

Assigning the note is essential when transferring mortgage rights. If the note isn’t assigned, the transfer is ineffective—unless the parties explicitly intend for the mortgage instrument to act as an assignment of the note. Without this intention, the failure to mention the note in the assignment raises questions about its validity.

Does Assignment Change the Borrower’s Obligations?

No. Even if the mortgage is assigned, the borrower (or any other party responsible for the debt) remains obligated under the terms of the original mortgage agreement. Assigning a mortgage doesn’t release anyone from their responsibilities.

Potential Challenges with Mortgage Assignments

Mortgage assignments aren’t always straightforward. Here are three common challenges to keep in mind:

• Recording Assignments: If assignments aren’t properly recorded, they may not be effective against creditors or bona fide purchasers. Florida statutes outline the importance of recording and prioritization.
• Uniform Commercial Code Implications: Since the mortgage debt is evidenced by a note, the Uniform Commercial Code (UCC) may come into play. Although the mortgage itself isn’t a secured transaction under Article 9 of the UCC, negotiability provisions can be relevant.
• Partial Assignments: Sometimes, only part of a mortgage (e.g., some of the notes secured by the mortgage) is assigned. In these cases, the assignee inherits proportional rights to the mortgage security.

Ormond Beach Law Firm

If you’re facing mortgage foreclosure, contact Ormond Beach foreclosure defense lawyer Andrew J. Pascale at 877-667-1211 for guidance.