Definition:
An assignment of mortgage occurs when a lender transfers the rights and obligations of an existing mortgage loan to another lender or financial institution.

Example:
If Mike’s original lender sells his home loan to a different bank, an assignment of mortgage takes place. Mike continues making payments under the same terms, but now sends them to the new lender instead.

Explanation:
Mortgage assignments are common in real estate, often happening behind the scenes. Lenders frequently transfer mortgages to free up capital, reduce risk, or improve cash flow. The borrower’s terms—interest rate, payment schedule, and loan duration—stay exactly the same; only the entity receiving payments changes.

When a mortgage is assigned, the original lender must formally document and notify the borrower about the transfer. Borrowers then begin making payments directly to the new mortgage holder.

Importance:
Understanding mortgage assignments matters because borrowers might suddenly find themselves interacting with a different lender. While the loan terms won’t change, the transition can cause confusion, and mistakes may happen if borrowers aren't properly informed. Borrowers should carefully verify assignment notices to avoid scams, confirm where future payments should go, and ensure their mortgage account remains accurate.

For buyers and sellers, clarity on mortgage assignments helps prevent surprises during the ownership period, maintaining smooth communication and timely payments.

In short, assignment of mortgage helps lenders manage risk, but borrowers should pay attention to changes to avoid disruptions or payment errors.