Utah Real Estate Code 57-1-15

Utah Code Real Estate 57-1-15: Effect of Recording Assignment of Mortgage

The recording of an assignment of a mortgage is not in itself considered notice of the assignment to the mortgagor, his heirs, or personal representatives so as to invalidate any payment made by them or either of them to the mortgagee.

Mortgage Assignment

A mortgage assignment, also referred to as an “assignment of mortgage”, occurs when the lender of the loan transfers their loan obligations to a third party. The lender will usually assign a mortgage by selling it to a new bank or lender. If this happens, the borrower will owe any previous obligations to the new lender. After the transfer, the newer lender essentially “stands in the shoes” of the old lender and assumes the rights and duties associated with the mortgage agreement. Sometimes borrowers can assign their mortgage rights to a third party as well. However, this is not as common. Any mortgage assignments must be recorded with the county recorder’s office. This is the department that stores and maintains records of property titles and transactions affecting deeds and titles. Generally, a title search at a local recorder’s office is supposed yield information as to whether there has been an assignment of mortgage rights. Any recordings of an assignment can affect subsequent legal proceedings, such as a foreclosure proceeding or a judicial lien hearing. As such, it is important to record assignments so the chain of title is clear.

Requirements for Executing a Mortgage Assignment

To carry out a mortgage assignment, the parties will need to execute a document that includes all the information necessary to complete the transfer. Assignment documents are generally required to contain the following information:
• The name of the assignor (current lender of the mortgage);
• The name of the assignee (the new lender taking over the mortgage);
• The name(s) of the borrowers;
• The date of the mortgage;
• The mortgage balance amount;
• The original mortgage record information; and
• The property’s legal description.
The assignment of mortgage to the new entity must also be recorded in the same government office that handles the county records for that property. If the assignment is not properly recorded by the new lender, then they would not have the ownership right to foreclose. However, in some cases an improper assignment of mortgage will not stop a foreclosure if the foreclosing party has the promissory note secured by the mortgage since the owner of the promissory note has the legal right to collect the debt amounts. Generally, when a mortgage is transferred or assigned to a third party, the promissory note will also be signed over. As such, it is important to be aware of the role both mortgages and promissory notes play in property transactions:

• Mortgage: A mortgage (or a deed of trust) is the document that pledges the property as a security for the mortgage debt and allows the lender of the mortgage to foreclose on the property if borrower fails to make monthly payments.
• Promissory Note: A promissory note is an IOU document that evidences the borrower’s promise to repay the loan debt. The owner of the promissory note generally has the legal right to collect the debt.
Benefits and Drawbacks of Mortgage Assignments
Mortgage assignments carry both benefits and drawbacks. One major benefit is:
• Mortgage assignment may allow a property that’s been on the market for a while to be sold. In many cases, mortgage assignments may allow buyers to purchase a house or property without having to contact a bank or lending institution for a loan. This is because they can have the previous party’s mortgage duties assigned to them. Most banks will understand the need for mortgage assignments and may even offer special packages for the transfer process.
One major drawback of assigning a mortgage is:
• When the assignment is not put into writing or recorded with the county, this can create confusion as to which parties are responsible for mortgage payments or for back debt. Also, non-payment of the monthly amounts owed can create various legal issues, especially where the original lender was already in debt when they assigned the mortgage.

Are there any Defenses to Mortgage Assignments?

When banks buy or sell mortgages from other banks and execute an assignment, the bank is required to record the mortgage assignment and also have the promissory note signed over to retain possession of the loan. One defense a homeowner may use in this situation occurs when the bank is foreclosing on the property. The homeowner may be able to use the “produce the note” defense. With this defense the homeowner can demand the foreclosing bank to produce the original promissory note. This can help prove that they are the true owner of the mortgage debt and have the legal right to foreclose. As noted above, the promissory note is what gives an entity the right to collect debt. There are times when the new bank does not do the proper paperwork to prove that they own the note and the mortgage, which would help make this defense successful.
Do I Need to Hire an Attorney for Help with a Mortgage Assignment?
Like any mortgage contract, assignments generally require the assistance of an attorney because they can be complicated. You may wish to work with a real estate attorney in your area if you need assistance with a mortgage assignment or other legal issues. This can include asserting a “produce the note” defense during a foreclosure proceeding after there has been an assignment. Additionally, an attorney can help you conduct a title search to determine if there are any outstanding assignments or debts associated with a property when you are purchasing property.

What Does a Quit Claim Deed Accomplish?

If two people hold title to property, whether as tenants in common, joint tenants, or tenants by the entireties, both must agree in order to sell, mortgage, or will the property. A quit claim deed in a divorce or legal separation gives one party the sole ownership of the property. This allows that party to sell or mortgage the property without the approval or consent of the other party. It also allows that party to execute a will to give the property to anyone he or she desires.

How Does a Quit Claim Deed Affect a Mortgage?

If you and your spouse jointly own the property, both of you are most likely obligated on the mortgage. If your spouse is being awarded the property, you are probably wondering, “How do I get my name off the mortgage after divorce?” In a divorce, the ownership of the property and the debt owed for that property are two separate issues. One factor that may come into play is whether the party who is awarded the property is also given primary physical custody of any children. Regarding the debt on the property, the three most common results are:
• One party is awarded the property, and is ordered to pay the mortgage and other expenses associated with the property (e.g., taxes, maintenance, and insurance);
• One party is awarded the property, and both parties are ordered to share in the payment of the mortgage and expenses; or
• One party is awarded the property, and the other party is ordered to pay the mortgage and expenses.

Assuming that the divorce settlement agreement or judgment requires your ex-spouse alone to pay the mortgage, it does not, however, require the mortgage holder to release you from the loan obligation. Once you get the final judgment, you can contact the lender, explain the situation, and ask if it is possible to be released from the obligation. However, since having two people to go after in the event of default is better than only having one person; it is unlikely that the lender will release you. If your ex-spouse defaults on the mortgage, the lender will join both of you in a foreclosure lawsuit. If your ex-spouse defaults, your recourse will be to go back to the court that granted the divorce. While the court cannot release you from the mortgage, it can order your ex-spouse to reimburse you for anything you need to pay to the lender, or re-structure the property division to compensate you.

Who Prepares The Quitclaim Deed Form?

These deeds are basic documents that can be created on your own, or through your family law attorney, or through an escrow or title company. A quitclaim deed is considered a legal document. As a result, it is always advisable to have a lawyer draft the deed itself or to have them review it before you agree to execute it.

Why Would I Need To Sign A Quitclaim Deed?

Divorce settlements usually result in one spouse retaining the marital home. The spouse that does not retain the property will likely need to execute a quitclaim deed. A quitclaim deed will remove the out-spouse (or departing spouse) from the title to the property, effectively relinquishing their equity or ownership in the home. The execution of a quitclaim deed is typically a requirement of a divorce settlement in order to complete the division of assets. The departing spouse’s interest in the property is likely to be converted to cash via a property buyout, or it can be offset by other community assets that will be retained in lieu of the marital home. It is presumed that the spouse conveying the property via quitclaim deed has some level of community interest to give up.

Does A Quitclaim Deed Affect The Mortgage?

It is a common misconception that signing a quitclaim deed will accomplish both of the following:
• Remove spouse from the title, and
• Remove spouse from the mortgage. This is the furthest thing from the truth.

In fact, a quitclaim deed and transfer of ownership have no impact whatsoever to the status of the existing mortgage. If the existing mortgage is a joint obligation in both spouse’s names, then that loan will either need to be refinanced or assumed by the retaining spouse in order for the debt to be removed from your credit report. The quitclaim deed alone does not impact the joint ownership of this lien. If your name remains on the mortgage after you’ve quit claimed your ownership in the property, any lender can still hold you accountable for the mortgage payments in the event a payment is missed.

Can A Quitclaim Deed Filing Be Reversed?

Once you sign a quitclaim deed and it has been filed and recorded with the County Clerk’s Office, the title has been officially transferred and cannot be easily reversed. In order to reverse this type of transfer, it would require your spouse to cooperate and assist in adding your name back to the title. This is not an easy assignment. The courts would need to get involved if you felt this deed was signed under duress, or if you did not receive the valuable consideration that was a condition of your transferring the property. This highlights the need for careful thought and consideration before executing such an instrument as the quitclaim deed. The legal ramifications of a quitclaim deed and its impact on community property claims will vary state to state.

Difference between a Mortgage Assignment and an Endorsement (Transfer) Of the Note

Banks use assignments and endorsements to transfer mortgages, deeds of trust, and promissory notes to other banks. When you take out a loan to purchase a home, you are required to sign two documents: a promissory note and a mortgage (or deed of trust). Assignments and endorsements are the ways that these documents are transferred between banks. If you’re facing a foreclosure and the foreclosing bank doesn’t have the proper endorsements and assignments, you might have a defense to the foreclosure. To fully understand the difference between an assignment of mortgage (or deed of trust) and endorsement of the note, you must understand the basic terms and documents involved in a residential mortgage transaction.

• Mortgagee and Mortgagor: In a mortgage, a “mortgagee” is the lender. The mortgagee gives the loan to the “mortgagor,” who is the homeowner/borrower.

• Loan documents: The loan transaction consists of two main documents: the mortgage (or deed of trust) and a promissory note. The mortgage (or deed of trust) is the document that pledges the property as security for the debt and permits a lender to foreclosure if you fail to make the monthly payments, whereas the promissory note is the IOU that contains the promise to repay the loan. The purpose of the mortgage (or deed of trust) is to provide security for the loan that is evidenced by a promissory note.

• Loan Transfers: Banks often sell and buy mortgages from each other. An “assignment” is the document that is the legal record of this transfer from one mortgagee to another. In a typical transaction, when the mortgagee sells the debt to another bank, an assignment is recorded and the promissory note is endorsed (signed over) to the new bank. These documents are separate and each has its own distinct set of rules that govern how they are exchanged between banks.

Promissory Notes

When a loan changes hands, the promissory note is endorsed (signed over) to the new owner of the loan. In some cases, the note is endorsed in blank which makes it a bearer instrument under Article 3 of the Uniform Commercial Code. This means that any party that possesses the note has the legal authority to enforce it.

Assignments and endorsements prove which party owns the debt and therefore may bring the foreclosure action. If the documentation was not proper, this can provide a defense to foreclosure in some cases. If you’re facing a foreclosure and think the foreclosing party in your case doesn’t have the right documentation, consider talking to an attorney who can give you information about the laws in your state, let you know whether an argument based on the right to foreclose (called “standing”) is likely to be successful in your case, and give you advice about what to do in your particular circumstances.

Terms Used In Utah Code 57-1-15
• Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
• Mortgagee: The person to whom property is mortgaged and who has loaned the money.
• Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.