Question

Debbie borrows $250,000 from Friendly California Bank (FCB) to buy a house. One month after the closing on Debbie’s house, FCB assigns its rights as Debbie’s creditor (including the right to receive Debbie’s mortgage payments) to Unfriendly Texas Bank (UTB). Can Debbie object successfully to the assignment from FCB to UTB? Why or why not?

Answer 1

Since Debbie borrows from FCB to purchase a house and is obligated to pay back the loan, this creates a mortgage on the house.

The payment to be received by FCB can be assigned by FCB to UTB provided the creditor, which is FCB in this case informed the borrower Debbie of the assignment.

Post assignment and information about the same, Debbie needs to pay mortgage payment to UTB instead of FCB.

The assignment can be opposed by Debbie only if:

1. The mortgage contract prevents assignment.

2. The terms of the mortgage has been changed.

3. The assignment has been done by FCB without informing the borrower.