Four years ago my husband and I refinanced our home with a mortgage broker, who immediately sold it to a big box lender, to whom we have been paying our mortgage payment for years. I happened to look at the records for our county recorder of deeds, but I don’t see any evidence of the transfer to the big box lender.
Shouldn’t I expect to see a recording of transfer from the mortgage broker to the big box lender and a recording of a satisfaction of the mortgage to the mortgage broker?
We’ll start with the easy part of your question. When a lender sells your loan or transfers the servicing of your loan, the loan or the lien that secures your loan is not “satisfied.” So you’d never expect to see a release of your mortgage due solely to your lender selling off or transferring servicing rights to a different lender. As you have not repaid your loan, there is no release to be seen. You’ll see a release of the mortgage at the time the loan is paid off in full.
Now what you could expect to see when you looked up the property records from your home is an assignment of the mortgage from the mortgage broker to the big box lender. That assignment might be a simple, one-page document indicating that the loan was assigned from the mortgage broker to the big box lender, including the name of the old lender and the name of the new lender along with certain other identifying information about the recorded mortgage.
Here’s where it gets a bit more complicated: Over the last 15 years or so, lenders have tried to automate the system of assigning mortgages and a group of lenders created the Mortgage Electronic Registration Systems (MERS). The goal was to have MERS act as the agent on the recording side and have lenders transfer loans among and between them without having to record the assignment of the mortgage with each individual property.
So if one property’s mortgage was packaged with 500 other loans in a portfolio for sale, the buying entity of that portfolio wouldn’t have to worry about recording 500 assignments of mortgages — one for each property. MERS would streamline the system from the lender’s side, but the public would not actually know who the owner of the loan was without the assignment. The Great Recession and the resulting loan defaults showed some of the limitations of the MERS system, as courts required that lenders record the assignment of a mortgage on each property. Not all courts in all states required the recording, but many did.
With that in mind, lenders will use MERS, but when they need to file suit against the homeowner for a loan default, they will now file the assignment of the mortgage against the property.
As for you, if you know who your lender is, you’ll make payments to that lender. If you need proof that the new lender is your lender, and you didn’t receive a letter from your original lender — the mortgage broker — telling you that your loan had been sold and giving you the information on the new lender, then you can call the old lender and have them research the transaction.
In turn, the new lender should contact you with the information you would need to make your future mortgage payments. We can’t tell you whether your jurisdiction would require the assignment of mortgage or not, but know that you shouldn’t expect to see a release of the original mortgage. Hope this information helps you.
Ilyce Glink is the creator of an 18-part webinar/e-book series called “The Intentional Investor: How to Be Wildly Successful in Real Estate” and the author of many books on real estate. She also hosts the “Real Estate Minute” on her YouTube channel. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them at ThinkGlink.com.