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Understanding the Assignment of Mortgages: What You Need To Know

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A mortgage is a legally binding agreement between a home buyer and a lender that dictates a borrower's ability to pay off a loan. Every mortgage has an interest rate, a term length, and specific fees attached to it.

Written by Attorney Todd Carney . Updated November 26, 2021

If you’re like most people who want to purchase a home, you’ll start by going to a bank or other lender to get a mortgage loan. Though you can choose your lender, after the mortgage loan is processed, your mortgage may be transferred to a different mortgage servicer . A transfer is also called an assignment of the mortgage.

No matter what it’s called, this change of hands may also change who you’re supposed to make your house payments to and how the foreclosure process works if you default on your loan. That’s why if you’re a homeowner, it’s important to know how this process works. This article will provide an in-depth look at what an assignment of a mortgage entails and what impact it can have on homeownership.

Assignment of Mortgage – The Basics

When your original lender transfers your mortgage account and their interests in it to a new lender, that’s called an assignment of mortgage. To do this, your lender must use an assignment of mortgage document. This document ensures the loan is legally transferred to the new owner. It’s common for mortgage lenders to sell the mortgages to other lenders. Most lenders assign the mortgages they originate to other lenders or mortgage buyers.

Home Loan Documents

When you get a loan for a home or real estate, there will usually be two mortgage documents. The first is a mortgage or, less commonly, a deed of trust . The other is a promissory note. The mortgage or deed of trust will state that the mortgaged property provides the security interest for the loan. This basically means that your home is serving as collateral for the loan. It also gives the loan servicer the right to foreclose if you don’t make your monthly payments. The promissory note provides proof of the debt and your promise to pay it.

When a lender assigns your mortgage, your interests as the mortgagor are given to another mortgagee or servicer. Mortgages and deeds of trust are usually recorded in the county recorder’s office. This office also keeps a record of any transfers. When a mortgage is transferred so is the promissory note. The note will be endorsed or signed over to the loan’s new owner. In some situations, a note will be endorsed in blank, which turns it into a bearer instrument. This means whoever holds the note is the presumed owner.

Using MERS To Track Transfers

Banks have collectively established the Mortgage Electronic Registration System , Inc. (MERS), which keeps track of who owns which loans. With MERS, lenders are no longer required to do a separate assignment every time a loan is transferred. That’s because MERS keeps track of the transfers. It’s crucial for MERS to maintain a record of assignments and endorsements because these land records can tell who actually owns the debt and has a legal right to start the foreclosure process.

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Assignment of Mortgage Requirements and Effects

The assignment of mortgage needs to include the following:

The original information regarding the mortgage. Alternatively, it can include the county recorder office’s identification numbers.

The borrower’s name.

The mortgage loan’s original amount.

The date of the mortgage and when it was recorded.

Usually, there will also need to be a legal description of the real property the mortgage secures, but this is determined by state law and differs by state.

Notice Requirements

The original lender doesn’t need to provide notice to or get permission from the homeowner prior to assigning the mortgage. But the new lender (sometimes called the assignee) has to send the homeowner some form of notice of the loan assignment. The document will typically provide a disclaimer about who the new lender is, the lender’s contact information, and information about how to make your mortgage payment. You should make sure you have this information so you can avoid foreclosure.

Mortgage Terms

When an assignment occurs your loan is transferred, but the initial terms of your mortgage will stay the same. This means you’ll have the same interest rate, overall loan amount, monthly payment, and payment due date. If there are changes or adjustments to the escrow account, the new lender must do them under the terms of the original escrow agreement. The new lender can make some changes if you request them and the lender approves. For example, you may request your new lender to provide more payment methods.

Taxes and Insurance

If you have an escrow account and your mortgage is transferred, you may be worried about making sure your property taxes and homeowners insurance get paid. Though you can always verify the information, the original loan servicer is responsible for giving your local tax authority the new loan servicer’s address for tax billing purposes. The original lender is required to do this after the assignment is recorded. The servicer will also reach out to your property insurance company for this reason.

If you’ve received notice that your mortgage loan has been assigned, it’s a good idea to reach out to your loan servicer and verify this information. Verifying that all your mortgage information is correct, that you know who to contact if you have questions about your mortgage, and that you know how to make payments to the new servicer will help you avoid being scammed or making payments incorrectly.

Let's Summarize…

In a mortgage assignment, your original lender or servicer transfers your mortgage account to another loan servicer. When this occurs, the original mortgagee or lender’s interests go to the next lender. Even if your mortgage gets transferred or assigned, your mortgage’s terms should remain the same. Your interest rate, loan amount, monthly payment, and payment schedule shouldn’t change.

Your original lender isn’t required to notify you or get your permission prior to assigning your mortgage. But you should receive correspondence from the new lender after the assignment. It’s important to verify any change in assignment with your original loan servicer before you make your next mortgage payment, so you don’t fall victim to a scam.

Attorney Todd Carney

Attorney Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such... read more about Attorney Todd Carney

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Loan trusts: options when dealing with the loan

For financial advisers - compiled by our team of experts, qualified in pensions, taxation, trusts and wealth transfer.

10 January 2024

The loan is repayable to the settlor on demand, in full or in part
The settlor can take loan repayments for their own benefit or 'gift' the loan, or part of it, if no longer required
Any outstanding loan is an asset of the settlor's estate on death
What happens to the loan on death is determined by the terms of the settlor's will, or the intestacy rules if there is no valid will
If the loan, or part of the loan, is repaid at any time, taking money from the bond may lead to a chargeable event and potentially an income tax charge

Jump to the following sections of this guide:

Loan plan – overview

Loan repayment to the settlor

Making a gift of the loan, waiving the loan to the trust, leaving the loan to spouse/civil partner, leaving the loan to someone else, leaving loan to spouse/civil partner if alive, or otherwise to trust, tax considerations when repaying the loan on death, loan plan – overview.

A loan plan is a suitable option for clients who wish to mitigate a potential IHT liability but:

Still need access to capital in the foreseeable future, and/or
Have already made, or are about to make, lifetime gifts to discretionary trusts and making further such gifts would result in a lifetime IHT tax charge

Broadly, the way it works is that the settlor makes a loan to trustees, i.e. there is no gift, and therefore no transfer of value. The trustees will usually buy an investment bond with the loan, and any future growth will belong to the trust beneficiaries and will be outside the settlor's estate for IHT. The outstanding loan, however, will be included in the settlor's estate for IHT.

While the IHT benefits are clear to see, the consequences of repaying the loan in the future are not always given due consideration. This can lead to issues centred around the fact that money will have to be withdrawn from the bond to repay the loan, and this could give rise to a chargeable event gain and income tax charge which for flexible or discretionary trusts, could be as high as 45% if the gain is assessed on the trust. In this guide, we look at the options for dealing with the loan so that the clients do not suffer an unexpected income tax charge after the death of your client.

Loan options during the settlor's lifetime

Under a loan trust the loan is repayable to the settlor on demand. This means that the settlor can ask for a part or full repayment of the loan at any time.

However, the settlor must not receive any more than their loan back. If they do receive more than they are owed, they could be subject to IHT on all the growth. It could also be regarded as a 'breach of trust' by the trustees with possible legal consequences should any beneficiaries take exception. It is therefore vital that the trustees monitor the loan repayments.

Loan trusts provide considerable flexibility over how and when the loan is repaid to the settlor. It is common for the settlor to set up regular repayments of the loan as a means of supplementing their income. These repayments reduce the outstanding loan, meaning the amount still in the estate reduces (as long as they are spending their withdrawals!).

Of course, the trustees must make the repayments by taking money from the bond, and this could lead to a chargeable event for income tax. However, where this is done by a part surrender (as opposed to a full surrender of segments), then providing each withdrawal is less than the cumulative tax deferred allowance there will be no immediate chargeable event and so no tax charge.

WARNING : remember that if adviser charging is being taken from the bond this will eat into the 5% allowance.

If the settlor requires repayments that exceed the 5% tax deferred allowance the trustees could consider cashing in full segments to repay the loan rather than taking a partial surrender across all segments. Where withdrawals are taken across all segments (i.e. partial withdrawal) any amount in excess of the 5% tax deferred allowance will be a chargeable gain and income tax could be payable.

If instead the trustees surrender full segments, this may produce a smaller gain and lower income tax charge.

Comparisons would need to be done to work out the most tax efficient method of surrender. For discretionary and flexible loan trusts any bond gain will be assessed on the settlor if alive and UK resident. For absolute loan trusts the gain is assessed on the beneficiaries unless they are minor children of the settlor. Top slicing relief is available to both the settlor and beneficiaries as appropriate.

The settlor does not have to take regular loan repayments. Instead, they could take ad hoc repayments as and when required. For example, the settlor may expect to have sufficient income from other sources in the early years but knows that income will reduce in the future. In this situation they take no loan repayments in those earlier years but they have the option to start regular or ad hoc repayments at some point in the future.

James is aged 60, married and with two adult children. He hopes to retire in a few years. He has sufficient income at present but is concerned that there will be a shortfall once he retires. He is also mindful that he will have an IHT issue and wishes to start estate planning. However, at this stage, he cannot currently afford to make outright gifts of his capital.

James sets up a loan trust by making a £200,000 loan to a discretionary trust. As there is no gift, there is no transfer of value for IHT and any growth on the investment will be outside of his estate.

James has sufficient income from his employment and so takes no loan repayments initially.

James retires aged 63 and decides to top up his pension by taking £10,000 per annum loan repayments in monthly instalments. The trustees make regular monthly withdrawals from the bond to meet this. No chargeable event occurs as the withdrawals are within the 5% tax deferred allowance.

James becomes entitled to his state pension at age 66 so decides to reduce the loan repayments to £2,000 per annum.

Can the loan be repaid by assigning bond segments to the settlor?

Assigning segments to the settlor in repayment of the loan will result in an immediate chargeable event, with any gain taxed on the settlor (or beneficiaries for an absolute loan trust). This is because the assignment is not a gift, but is made to satisfy the settlor's rights to repayment under the loan agreement. As such it is treated as an assignment for 'money or money's worth'.

As there are no tax advantages to repaying the loan by the assignment of segments, the trustees will normally choose to surrender part of the bond themselves so that they can repay loan in cash.

Assignment of segments to distribute capital (growth) to beneficiaries are classed as gift assignments and do not create a chargeable event and any gains on subsequent encashment would be assessed on the beneficiary in the normal way.

The outstanding loan is an asset of the settlor. Like any other asset, the settlor can choose to gift the loan. This can be done in two ways.

Waiving the right to the loan

If the settlor decides that they no longer need access to their capital they could waive their right to the loan either in full or in part. A deed of waiver would need to be completed. The loan trust provider may offer a draft deed but if not, a solicitor will be able to draw one up.

If the settlor waives their right to the entire loan then the trustees no longer have to repay the loan. This means that the bond is now held for the beneficiaries and the trust has effectively become a gift trust.

Waiving the loan is a 'gift' and will be a transfer of value for IHT. For an absolute trust this will be a potentially exempt transfer (PET) and so there will be no immediate IHT charge. For flexible and discretionary trusts it will be a chargeable lifetime transfer (CLT), and if it is more than their available nil rate band this could mean an immediate IHT charge at the lifetime rate.

If the settlor survives seven years, the gifted loan will be outside their estate and no longer subject to IHT. However, for flexible and discretionary trusts, there is a greater chance of there being an IHT periodic charge or exit charge as the value of the trust will now be the full value of the bond, with no deduction for the loan.

Alternatively, the loan could be waived the in instalments using the IHT annual gift allowance. If no previous gifts have been made, up to £6,000 could be waived in year one followed by up to £3,000 each subsequent year. These amounts would be immediately outside their estate. A deed of waiver is required each time part of the loan is waived.

Example (continued)

A few years later James receives a modest inheritance when his mother dies. He does not yet feel confident to give up the entire outstanding loan but is happy to waive his right to some of it. Having made no previous gifts he waives £6,000 of the loan. This is an exempt transfer using the current and previous year's annual gift exemption.

In the next year he waives a further £3,000 of the loan. Again this transfer is exempt from IHT and reduces the amount of outstanding loan that remains in his estate.

In the following year James' father dies and he receives a sizeable inheritance. As a result, he is happy that he will have more than enough income for his needs and will no longer need to supplement his income by taking loan repayments. His IHT problem has become worse and he has more capital than he will need.

The original loan was £200,000 but £50,000 has already been repaid to James and spent or gifted by him. James completes a deed of waiver to give up his right to the remaining loan of £150,000 in favour of the trust. The entire value of the bond now belongs to the discretionary trust and there is no longer a debt for the trustees to worry about. This is now effectively a gift trust.

By waiving the loan, James has made a chargeable lifetime transfer (CLT) of £150,000. As he has made no other CLTs in the previous seven years it falls within his nil rate band and no IHT is payable at this time. There will be no further tax on this gift if he survives the waiver by seven years.

James must receive no further payments from the trust.

Gifting the loan to another person

As an alternative to waiving the loan, the settlor could gift the rights to it some or all of it to another individual. This option gives the settlor more control of who benefits from the loan.

A deed of gift will be required. Again, it may be that the loan trust provider offers a draft deed but otherwise a solicitor will need to prepare one.

The gift will be an exempt transfer for IHT if made in favour of a spouse or civil partner, but otherwise it will be a PET.

The new owner of the loan will have the same options as the settlor had. In other words the loan will be repayable on demand in full or in part and any amount outstanding at the date of death will form part of that individual's taxable estate.

Loan options following settlor's death – the importance of updating wills

One of the most important things to consider when establishing a loan trust is to consider what will happen to the outstanding loan and the investment bond following the death of a settlor.

On death, any outstanding loan will be an asset of the settlor's estate and it's likely that it will need to be repaid to the executors/legal personal representatives on death. To repay the loan, some or all of the bond may need to be surrendered and this might create a chargeable event and an income tax liability, assessed on either on the deceased settlor if the event happens in the same tax year as death, or the trustees at 45% if the event happens in a tax year after the settlor's death.

To avoid this possibility and the potential for an immediate income tax charge, when the loan trust is set up, the settlors should consider the following options with their legal advisers to ensure that their individual needs are met:

The deceased makes a gift of the loan to the trust in their will. The value of the loan is still included in the deceased's estate for IHT, but the trustees would no longer have to repay the loan to the executors.

The trustees then have full control over the bond and the timing of chargeable events without being encumbered by the loan. For discretionary trusts, when the trustees decide to make a payment to a beneficiary this can often be achieved by assigning the bond, or policy segments.

A chargeable event would then occur when the beneficiary chose to surrender all or part of the bond, and tax assessed on that beneficiary.

If the loan trust is absolute, then any gains would always fall on the beneficiary both before and after the death of the settlor (apart from the situation during the settlor's lifetime where the beneficiary is their minor child). And once 18, a beneficiary can demand that the bond is transferred to themselves.

Note, the executors/LPRs cannot choose to 'waive' the loan to the loan trust themselves. They can only do this if the will instructs them to.

This would be an exempt transfer for IHT and this will give the widow(er) the same options for dealing with the loan as the deceased had during their lifetime.

Chargeable events can then be deferred until such time the surviving spouse/civil partner asks for full repayment, or a significant part repayment. When a chargeable event does occur on making a repayment, it will normally be assessed on the trustees at 45%, unless it happens in the same tax year as the settlor's death. However in the case of a joint loan trust, 50% of the gain would be assessed on the surviving settlor.

The outstanding loan will form part of the surviving spouse's/civil partner's estate for IHT.

Of course with this option, the trustees are still have a duty to make sure the loan can be repaid, and this liability means that they are not as free to make payments to the trust beneficiaries.

If the loan is left to another individual who was not the spouse/civil partner then this will be a chargeable transfer for IHT. Again the recipient will have the same options for dealing with the loan as the surviving spouse/civil partner, with the same income tax consequences for the bond when a loan repayment is requested.

Similarly, the trustees must be mindful of the loan before paying any benefits to the trust beneficiaries.

It is also possible to combine the options above. The loan could be passed to the surviving spouse if they survive the settlor but otherwise waived in favour of the trust. The transfer would be IHT exempt if the spouse survives the settlor but chargeable if it is waived.

By dealing with the outstanding loan in one of these ways it's possible to avoid the full repayment of the loan following the death of the settlor. This should give the trustees greater ability to manage the timing of chargeable events that are assessed on the trust.

Keith and Jess are a married couple with two adult children and grandchildren. They both take out discretionary loan trusts. Keith and Jess and their two children are all trustees. Each trust invests in an offshore bond written on the lives of the children. They also take the opportunity to revisit their wills. Each wants to ensure that the survivor of them is looked after but then to ensure that their assets pass down the line.

Their solicitor recommends that they add codicils to their existing wills to deal with the outstanding loan at death. The codicil gifts the outstanding loan to the spouse should they survive the deceased by 30 days but otherwise the loan is waived in favour of the trust.

Keith dies first and the right to his loan passes to Jess. There is no IHT on the outstanding loan as it benefits from the spouse exemption. The bond continues and there is no chargeable event as the lives assured are still alive. Jess takes 5% withdrawals from the bond each year to top up her income.

When Jess dies, the remaining loan from Keith's trust and the loan from her own trust form part of her estate for IHT. But there won't be any requirement to repay the loan, instead, the outstanding loan from both trusts is waived to the respective discretionary trusts. And as the trusts no longer have a debt the trustees can now consider making assignments of bond segments to beneficiaries without creating a chargeable event.

Discretionary/flexible trusts - often the bond is set up with additional lives assured, or on a capital redemption basis, and will continue after the settlor's death. If part of the bond needs to be surrendered by the trustees to repay the loan, the trustee could use any remaining tax deferred allowance to repay the loan.

However, if the amount required is in excess of the 5% tax deferred allowance if might be better to consider repaying the loan by surrendering whole segments. This is because where withdrawals are taken across all segments (i.e. partial withdrawal) any amount in excess of the 5% tax deferred allowance is classed as a chargeable gain, even if there is little or no growth on the bond. Whereas where whole segments are surrendered, the gain will be the actual investment gain, which might be smaller than the gain created by the partial surrender. Comparisons would need to be done to work out the most tax efficient method of surrender.

Where the loan needs to be repaid prompt action might be required to avoid any gain being taxed at the trust rate of 45% (with no top slicing relief). This is because the trust rate applies to any gains occurring in a tax year after the death of the settlor. Whereas any gains occurring in the same tax year as death, are assessed on the deceased settlor (with the benefit of top slicing relief).

Tip : a gain created by partial surrender across all segments occurs on the policy anniversary. Check that the policy anniversary is in the same tax year as death to avoid the gain being assessed on the trust.

Absolute trust - any chargeable gains that arise on or after the settlor's death will always be assessed on the beneficiaries of an absolute trust with the benefit of top slicing relief.

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LIVING TRUST

What is an assignment of trust deed.

By Tom Streissguth

What Is a Corporate Assignment of Deed of Trust?

Stack of house related papers, including mortgage and warranty

If you own a home, you may have signed a trust deed that gives the mortgage lender a claim on the property. A default on the loan gives the lender the legal authority to foreclose on the loan and take possession of the house. An assignment of a trust deed conveys that claim to another party.

Considerations

Lenders have the right to sell their home loans. This can happen once or several times over the long life of a mortgage. The usual customers for mortgages are banks and other companies that are seeking safe and stable investment returns. This "secondary" market for mortgages is quite active, and a lender has plenty of opportunity to sell a mortgage and turn a profit. Read More: What Is a Corporate Assignment of Deed of Trust?

When a lender sells the loan, it assigns the trust deed to the buyer. “Assignment” means to convey a claim or a right to another party, known as the “assignee.” This is done by creating another legal document — the assignment of trust deed — and having it signed by both buyer and seller. The trust deed, and other documents associated with the loan, become the property of the buyer.

The assignment of trust deed is a short, usually single-page document. The body text gives the names of the deed buyer and the property owner, the date of the original trust deed, and the legal description of the property for which the original deed was executed. It may also give the terms of the deed sale. The seller signs and dates the document, and has it notarized. The buyer then has the assignment of trust deed recorded with the registrar of the county where the property is located.

A borrower has no legal right to block or negotiate the terms of an assignment of trust deed. The assignment does not affect the terms of the loan. The monthly payments remain the same, although the borrower will have to send them to a new address. The new owner of the trust deed becomes the lender and collects all mortgage payments, sometimes on its own and sometimes through a servicing company. If a default occurs, the latest assignee has the right to foreclose and repossess the home.

US Legal: Assignment of Trust Deed
Guide to the Stock Market: Assignment of Trust Deed

Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.

How to Fill Out the Deed of a Trust to Secure Assumption
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Using a deed of trust

A deed of trust is used to secure a loan on real property. Learn how this legal document can be an easy way for a lender to collateralize a loan.

Find out more about property owners

by Brette Sember, J.D.

Brette is a former attorney and has been a writer and editor for more than 25 years. She is the author of more than 4...

Understanding a deed of trust

Deed of trust vs. mortgage, wraparound mortgages, assignment of a deed of trust.

A deed of trust is a legal document that essentially puts a piece of property up as collateral for a loan. Although sometimes used in place of a mortgage, a deed of trust functions differently and makes foreclosing on the property simple for the lender.

A deed of trust is used with a loan when real property is used to secure the loan. The deed gives the lender the right to receive the proceeds of the sale of the property at auction if the loan is not paid. Unlike a warranty deed , which immediately transfers the owner's rights in the property to the buyer, a deed of trust is not intended to transfer title to a property unless the loan is unpaid.

A deed of trust has three parties:

trustor: the property owner borrowing the money
lender: the person or company making the loan, sometimes called the beneficiary
trustee: the person or company (often an escrow company ) who holds legal title to the real property under the deed and has the responsibility of selling the property at auction if the trustor doesn't make the required payments on the loan

A mortgage and a deed of trust are both used to secure a loan, which is a separate document. One difference between these two legal documents is that a deed of trust has three parties (trustor, lender, and trustee) while a mortgage has only two (lender and borrower). In the case of a mortgage, if a borrower does not pay the associated loan, the property must be foreclosed on in court so that the lender can sell it. A deed of trust, on the other hand, does not require a court process. The trustee can sell the property without a court order if the trustor does not pay. Because of this, a deed of trust allows for a faster and less expensive process if the loan is not paid.

A wraparound mortgage, also known as an inclusive deed of trust, is used when there is an existing mortgage on the property that remains in place. For example, Sandra has a mortgage on her home. Marco buys the home with the promise to pay her the monthly mortgage amount she owes, which Sandra then uses to pay the mortgage in her name. This arrangement is made legally binding with a deed of trust. If Marco doesn't pay Sandra, she forecloses and gets the property back without a court proceeding. So in essence, Marco's loan wraps around the existing mortgage to cover it, hence the name for this type of deed of trust.

Like any deed, a deed of trust can be transferred from one person to another, similar to the way a bank can sell a loan to another bank. The document that transfers a deed of trust, called an assignment of a deed of trust, must be filed in the county clerk's office to be valid.

A deed of trust is a convenient way to avoid a court proceeding if a loan is not paid. This type of nonjudicial foreclosure is quick and inexpensive for the person or company lending the money. You can prepare a deed of trust yourself or you can use an online service provider .

Debt Assignment: How They Work, Considerations and Benefits

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Ryan Oakley

What Is Debt Assignment?

The term debt assignment refers to a transfer of debt , and all the associated rights and obligations, from a creditor to a third party. The assignment is a legal transfer to the other party, who then becomes the owner of the debt. In most cases, a debt assignment is issued to a debt collector who then assumes responsibility to collect the debt.

Key Takeaways

Debt assignment is a transfer of debt, and all the associated rights and obligations, from a creditor to a third party (often a debt collector).
The company assigning the debt may do so to improve its liquidity and/or to reduce its risk exposure.
The debtor must be notified when a debt is assigned so they know who to make payments to and where to send them.
Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA), a federal law overseen by the Federal Trade Commission (FTC).

How Debt Assignments Work

When a creditor lends an individual or business money, it does so with the confidence that the capital it lends out—as well as the interest payments charged for the privilege—is repaid in a timely fashion. The lender , or the extender of credit , will wait to recoup all the money owed according to the conditions and timeframe laid out in the contract.

In certain circumstances, the lender may decide it no longer wants to be responsible for servicing the loan and opt to sell the debt to a third party instead. Should that happen, a Notice of Assignment (NOA) is sent out to the debtor , the recipient of the loan, informing them that somebody else is now responsible for collecting any outstanding amount. This is referred to as a debt assignment.

The debtor must be notified when a debt is assigned to a third party so that they know who to make payments to and where to send them. If the debtor sends payments to the old creditor after the debt has been assigned, it is likely that the payments will not be accepted. This could cause the debtor to unintentionally default.

When a debtor receives such a notice, it's also generally a good idea for them to verify that the new creditor has recorded the correct total balance and monthly payment for the debt owed. In some cases, the new owner of the debt might even want to propose changes to the original terms of the loan. Should this path be pursued, the creditor is obligated to immediately notify the debtor and give them adequate time to respond.

The debtor still maintains the same legal rights and protections held with the original creditor after a debt assignment.

Special Considerations

Third-party debt collectors are subject to the Fair Debt Collection Practices Act (FDCPA). The FDCPA, a federal law overseen by the Federal Trade Commission (FTC), restricts the means and methods by which third-party debt collectors can contact debtors, the time of day they can make contact, and the number of times they are allowed to call debtors.

If the FDCPA is violated, a debtor may be able to file suit against the debt collection company and the individual debt collector for damages and attorney fees within one year. The terms of the FDCPA are available for review on the FTC's website .

Benefits of Debt Assignment

There are several reasons why a creditor may decide to assign its debt to someone else. This option is often exercised to improve liquidity and/or to reduce risk exposure. A lender may be urgently in need of a quick injection of capital. Alternatively, it might have accumulated lots of high-risk loans and be wary that many of them could default . In cases like these, creditors may be willing to get rid of them swiftly for pennies on the dollar if it means improving their financial outlook and appeasing worried investors. At other times, the creditor may decide the debt is too old to waste its resources on collections, or selling or assigning it to a third party to pick up the collection activity. In these instances, a company would not assign their debt to a third party.

Criticism of Debt Assignment

The process of assigning debt has drawn a fair bit of criticism, especially over the past few decades. Debt buyers have been accused of engaging in all kinds of unethical practices to get paid, including issuing threats and regularly harassing debtors. In some cases, they have also been charged with chasing up debts that have already been settled.

Federal Trade Commission. " Fair Debt Collection Practices Act ." Accessed June 29, 2021.

Federal Trade Commission. " Debt Collection FAQs ." Accessed June 29, 2021.

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Trust Loans to Beneficiaries: A Topic of Interest

For estate planning practitioners, loans are a versatile tool which can be utilized to accomplish a broad range of goals. The ongoing interest rate environment has generated many unique opportunities, as the Applicable Federal Rate (“AFR” – the IRS-mandated minimum interest rate for intrafamily lending) sits at or near historical lows. While intrafamily loans are a popular mechanism to facilitate wealth transfer, loans also frequently come into play in the trust context. In many cases, trustees can expect to receive requests for loans from irrevocable trusts to one or more beneficiaries. While useful in appropriate situations, loans in the trust context require careful consideration in order to avoid pitfalls and ensure the settlor’s original intent is respected.

BENEFICIARY BORROWING

A loan can often serve as an alternative means by which a beneficiary may enjoy the assets of the trust, and there are a variety of reasons why a beneficiary loan might be appropriate. In situations where the dispositive provisions of the trust cannot accommodate an outright distribution, a loan can provide a mechanism for beneficiaries to access trust funds in a time of need. Each time a distribution is made to a particular beneficiary, the trust assets (and thus the interests of the other beneficiaries) are diminished. Trustees owe a duty of impartiality – they must act in favor of all beneficiaries equally. While every individual beneficiary has different needs, allocating a disproportionate amount of assets to one over another can be problematic. By virtue of the simple fact that a loan is subject to repayment, it can be used to grant access to trust resources without depleting the principal, preserving the trust corpus for continued growth and enjoyment by others.

Having a trust as a lender can be advantageous. The minimum interest rates on loans to beneficiaries (as established by the IRS) are generally much lower than what a commercial lender would offer. A beneficiary obtaining a mortgage loan from their trust, as opposed to a commercial bank, generally could enjoy a substantially discounted rate of interest. The savings that would accumulate over the life of such a loan could amount to a substantial financial benefit, while never requiring a distribution.

Loans can also serve as a means of furthering the original intent of the settlor. Trusts are created for a variety of reasons, one of which is to control beneficiary access to substantial financial assets. Settlors seek to protect family wealth from creditors and to prevent misuse by beneficiaries who are not prepared to manage a large inheritance. However, even a spendthrift beneficiary may experience a legitimate, unforeseen need for trust resources. While granting a distribution request based on such circumstances may not be contrary to the spirit of the settlor’s wishes, a trustee may nevertheless be restricted from doing so by the language of trust. Here again, a loan could serve as a sort of safety valve, providing an alternative means of accessing trust funds for appropriate purposes.

IMPORTANT CONSIDERATIONS

While a loan to a beneficiary can be a versatile tool, any lending relationship must be assessed carefully by all parties to avoid potential issues. Below are some of the considerations which could be pertinent in establishing loans to trust beneficiaries.

THE BIFURICATION EFFECT

As with some other states, Delaware law permits the “bifurcation” of trustee duties. This allows for the creation of a “directed trust” structure, in which certain duties that are traditionally held by a trustee, such as distribution decisions or the management of trust investments, are allocated to other co-fiduciaries, commonly known as “advisers.” ¹. The advisers holding these responsibilities, in turn, direct the trustee in carrying out the powers that fall within their purview.

Jurisdictions like Delaware have seen an increase in the prevalence of directed trusts, where trustees typically take on a purely administrative role. Often, the trustee has no responsibility for investments, and is instead directed in the management of trust assets by an appointed investment direction adviser. This development has given rise to the question of whether beneficiary loans fall within the category of “investment decisions,” under the authority of the investment direction advisor, or instead remain a non-investment matter, for which the trustee is responsible. The answer has not always been straightforward.

When a directed trustee receives a request for a loan to a beneficiary, their first action will likely be to review the portion of the trust document that pertains to lending and borrowing. Assuming the trust does not explicitly prohibit the loan (in which case no further analysis is needed), the trustee will attempt to determine which party holds the decision-making authority to make loans from the trust. In order to avoid ambiguity, this responsibility is often purposely assigned to a specific party, whether it be the investment direction adviser, the trustee, or some other powerholder.

If the trust language is unclear or silent on the topic, trustees will look for statutory guidance. Under 12 Del. C. § 3313(d), the term “investment decision” includes the powers to borrow and lend “for investment purposes.” In recent years, this provision was amended to clarify that “the power to lend for investment purposes shall be considered an investment decision only with respect to loans other than those described in § 3325(19)b. and c.”

§ 3325(19)b. describes beneficiary loans that are “made in lieu of a distribution amount that could have been made currently to or for such beneficiary under the terms of the governing instrument, not made in excess of such amount, and the fiduciary creates a reserve for the potential liability.”

§ 3325(19)c. describes beneficiary loans that are “made to or for the benefit of another trust of which such beneficiary is also a beneficiary, provided the requirements of paragraph (19)b. . . . are satisfied.”

Thus, by default, a loan that is made to a beneficiary (or another trust for the benefit of such beneficiary) in place of a distribution that would have been permissible under the trust is not clearly an “investment decision.” This may place decision-making authority for such loans under the purview of the trustee (rather than the investment direction adviser). As “investment purposes” may be interpreted in a number of ways, many trustees take a conservative approach and ensure that the amount of any beneficiary loan be clearly authorized, both as an investment decision and a distribution decision. In this way, the trustee (or other individual authorized to exercise distribution discretion) will have reviewed the matter thoroughly, should there ever be a request from the beneficiary to forgive the loan.

Worth noting, however, is the opening sentence of § 3313(d), which contains the following phrase: “. . . unless the terms of the governing instrument provide otherwise.” Regardless of what the statute provides, practitioners and settlors are free to draft trust instruments in a way that explicitly assigns authority over loans (regardless of form or function) to the party of their choosing.

Even more specific provisions may also be included, detailing which beneficiaries may take loans, upon which terms, and for which purposes. There may be requirements related to interest rates or security. Some provisions provide instruction as to how and when action should be taken to collect outstanding debts. These provisions are often seen as a welcome guide by fiduciaries as they carry out their responsibilities. Lending provisions can be a critical component of any trust document, as they can even affect the taxability of the trust². Thus, they are often carefully crafted.

FUNCTIONAL FORMALITIES

The creation of a loan necessarily entails documentation, as well as adherence to certain formalities. It is important to remember that a loan is not the same as a distribution, and it should not have the appearance of a distribution.

The terms of a loan are typically laid out in a promissory note, which serves as the governing document for the transaction, as well as evidence of the debt. Notes are generally executed by the borrower, and typically provide (at a minimum) the principal amount, interest rate, payment obligations, maturity date, default provisions, details of security (if any), and any other pertinent aspects of the agreement. In situations where the debt is secured by real estate or other assets, there may be additional formalities required, such as the recording of a mortgage or deed of trust. Properly documenting the transaction in this way provides evidence of the debt, ensures that the transaction is accounted for accurately, and helps to avoid future disputes. As mentioned above, trustees have a duty to deal impartially with the beneficiaries, and the administration of loans must reflect that. Well-drafted debt instruments assist trustees in adhering to this important responsibility.

Interest is a key consideration for any loan, and it is no different for beneficiary loans. On a monthly basis, the IRS publishes its ruling on the Applicable Federal Rates (AFR)³. In nearly all cases, loans to beneficiaries carry interest rates that meet or exceed the AFR for the applicable month. The use of a sub-AFR interest rate is generally considered to be a below-market loan. A below-market loan in the trust context can be problematic, as the difference between the loan’s interest rate and the AFR rate is generally treated as a distribution from the trust to the borrowing beneficiary⁴. Use of the AFR rates avoids this scenario. Ultimately, determination of the interest rate, as with the other terms of loan, falls within the purview of the person authorized under the trust to make such a determination. As with other estate planning matters, planning for beneficiary loans in the trust context is complex and requires consultation with qualified professionals. Commonwealth Trust Company, a Delaware qualified trustee, is experienced in working with closely with attorneys and their clients to ensure their trust is administered correctly and efficiently, as it was intended.

1. See 12 Del C. § 3313. 2. See, e.g., I.R.C. § 675(2) 3. The Index of Applicable Federal Rates Rulings can be found at: https://apps.irs.gov/app/picklist/list/federalRates.html. 4.See I.R.C. § 7872

Please click here to download the full article via PDF.

Commonwealth Trust Company is pleased to provide this article as a guide. Commonwealth Trust Company is not engaged in the practice of law and is not providing legal advice by the provision of these materials. Commonwealth Trust Company recommends that clients seek the opinion of their attorney regarding the specific legal and tax issues addressed in this article.

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Assignment of Rents – What, Why, and How?

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Madelaine prescott, esq., share this post:.

November 29, 2023

These days, almost all commercial loans include an Assignment of Rents as part of the Deed of Trust or Mortgage. But what is an Assignment of Rents, why is this such an important tool, and how are they enforced?

An Assignment of Rents (“AOR”) is used to grant the lender on a transaction a security interest in existing and future leases, rents, issues, or profits generated by the secured property, including cash proceeds, in the event a borrower defaults on their loan. The lender can use the AOR to step in and directly collect rental payments made by the tenant. For an AOR to be effective, the lender’s interest must be perfected, which has a few fairly simple requirements. The AOR must be in writing, executed by the borrower, and recorded with the county where the property is located. Including an AOR in the recorded Deed of Trust or Mortgage is the easiest and most common way to ensure the AOR meets these requirements should it ever need to be utilized.

When a borrower defaults, lenders can take advantage of AORs as an alternative to foreclosure to recoup their investment. With a shorter timeline and significantly lower costs, it is certainly an attractive option for lenders looking to get defaulted borrowers back on track with payments, without the potential of having to take back a property and attempting to either manage it or sell it in hopes of getting your money back out of the property. AORs can be a quick and easy way for the lender to get profits generated by the property with the goal of bringing the borrower out of default. But lenders should carefully monitor how much is owed versus how much has been collected. If the AOR generates enough funds so that the borrower is no longer in default, the lender must stop collecting rents generated by the property.

Enforcement of an AOR can also incentivize borrowers to work with the lender to formulate a plan, as many borrowers rely on rental income to cover expenses related to the property or their businesses. Borrowers are generally more willing to come to the table and negotiate a mutual, amicable resolution with the lender in order to protect their own investment. A word of warning to lenders though: since rental income is frequently used to pay expenses on the property, such as the property manager, maintenance, taxes, and other expenses, the lender needs to ensure they do not unintentionally hurt the value of the property by letting these important expenses fall behind. This may hurt the lender’s investment as well, as the property value could suffer, liens could be placed on the property, or the property may fall into disrepair if not properly maintained. It is also important for lenders to be aware of the statutes surrounding the payment of these expenses when an AOR is being used, as some state’s statutes require the lender to pay certain property expenses out of the collected rents if requested by the borrower.

In addition to being shorter and cheaper than foreclosure, AORs can be much easier to enforce. In California, the enforcement of an AOR is governed by California Civil Code §2938. This statute specifies enforcement methods lenders can use and restrictions on use of these funds by the lender, among other things. Under CA Civil Code §2938(c), there are 4 ways to enforce an AOR:

The appointment of a receiver;
Obtaining possession of the rents, issues, profits;
Delivery to tenant of a written demand for turnover of rents, issues, and profits in the correct form; or
Delivery to assignor of a written demand for the rents, issues, or profits.

One or more of these methods can be used to enforce an AOR. First, a receiver can be appointed by the court, and granted specific powers related to the AOR such as managing the property and collecting rents. They can have additional powers though; it just depends on what the court orders. This is not the simplest or easiest option as it requires court involvement, but this is used to enforce an AOR, especially when borrowers or tenants are uncooperative. Next is obtaining possession of the rents, issues, profits, which is exactly as it seems; lenders can simply obtain actual possession of these and apply the funds to the loan under their AOR.

The third and fourth options each require delivery of a written demand to certain parties, directing them to pay rent to the lender instead of to the landlord. Once the demand is made, the tenant pays their rent directly to the lender, who then applies the funds to the defaulted loan. These are both great pre-litigation options, with advantages over the first two enforcement methods since actual possession can be difficult to obtain and courts move slowly with high costs to litigate. The written demands require a specific form to follow called the “Demand To Pay Rent to Party Other Than Landlord”, as found at CA Civil Code §2938(k). There are other notice requirements to be followed here, so it is essential to consult with an experienced attorney if you are considering either of these options. California Civil Code §2938 specifically provides that none of the four enforcement methods violate California’s One Action Rule nor the Anti-Deficiency Rule, so lenders can confidently enforce their AORs using the above methods with peace of mind that they are not violating other California laws.

Whether you are looking to originate a new loan, or you are facing a default by your borrower, understanding what an Assignment of Rents is and how it operates can be extremely beneficial. Enforcing an AOR can be an easier option than foreclosure and can help promote a good relationship with your borrower when handled correctly. If you have any questions about AORs, or need further details on how to enforce them, Geraci is here to help.

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Assignment Of Loan

Jump to section, what is an assignment of loan.

Under an assignment of loan, a lender (the assignor) assigns its rights relating to a loan agreement to a new lender (the assignee). Only the assignor's rights under the loan agreement are assigned. The assignor will still have to perform any obligations it has under the facility agreement.

The debtor, the recipient of the loan, must be notified when a debt is assigned. When there is an assignment of a loan, a Notice of Assignment (NOA) is sent out to the debtor informing them that a new party is now responsible for collecting any outstanding amount.

Assignment Of Loan Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.14 5 dex1014.htm ASSIGNMENT OF LOAN DOCUMENTS , Viewed October 21, 2021, View Source on SEC .

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Shelia A. Huggins is a 20-year North Carolina licensed attorney, focusing primarily on business, contracts, arts and entertainment, social media, and internet law. She previously served on the Board of Visitors for the North Carolina Central University School of Business and the Board of Advisors for the Alamance Community College Small Business Center. Ms. Huggins has taught Business and Entertainment Law at North Carolina Central University’s law school and lectured on topics such as business formation, partnerships, independent contractor agreements, social media law, and employment law at workshops across the state. You can learn more about me here: www.sheliahugginslaw.com www.instagram.com/mslegalista www.youtube.com/mslegalista www.facebook.com/sheliahuugginslaw

Steven Stark has more than 35 years of experience in business and commercial law representing start-ups as well as large and small companies spanning a wide variety of industries. Steven has provided winning strategies, valuable advice, and highly effective counsel on legal issues in the areas of Business Entity Formation and Organization, Drafting Key Business Contracts, Trademark and Copyright Registration, Independent Contractor Relationships, and Website Compliance, including Terms and Privacy Policies. Steven has also served as General Counsel for companies providing software development, financial services, digital marketing, and eCommerce platforms. Steven’s tactical business and client focused approach to drafting contracts, polices and corporate documents results in favorable outcomes at a fraction of the typical legal cost to his clients. Steven received his Juris Doctor degree at New York Law School and his Bachelor of Business Administration degree at Hofstra University.

Rhea de Aenlle is a business-savvy attorney with extensive experience in Privacy & Data Security (CIPP/US, CIPP/E), GDPR, CCPA, HIPAA, FERPA, Intellectual Property, and Commercial Contracts. She has over 25 years of legal experience as an in-house counsel, AM Law 100 firm associate, and a solo practice attorney. Rhea works with start-up and midsize technology companies.

Bukhari Nuriddin is the Owner of The Nuriddin Law Company, P.C., in Atlanta, Georgia and an “Of Counsel” attorney with The Baig Firm specializing in Transactional Law and Wills, Trusts and Estates. He is an attorney at law and general counsel with extensive experience providing creative, elegant and practical solutions to the legal and policy challenges faced by entrepreneurs, family offices, and municipalities. During his legal careers he has worked with entrepreneurs from a wide array of industries to help them establish and grow their businesses and effectuate their transactional goals. He has helped establish family offices with millions of dollars in assets under management structure their estate plans and philanthropic endeavors. He recently completed a large disparity study for the City of Birmingham, Alabama that was designed to determine whether minority and women-owned businesses have an equal opportunity to participate in city contracting opportunities. He is a trusted advisor with significant knowledge and technical experience for structuring and finalizing a wide variety of complex commercial transactions, estate planning matters and public policy initiatives. Raised in Providence, Rhode Island, Bukhari graduated from Classical High School and attended Morehouse College and Howard University School of Law. Bukhari has two children with his wife, Tiffany, and they live in the Vinings area of Smyrna.

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Understanding When Substitution of Trustee Is Required and its Effects

Use this note to better understand when substitution of trustee is required and its effects.

Carefully research and adapt the following material to the facts and circumstances of your matter and verify the currency of the legal authorities.

For further discussion of trustee substitutions generally, see California Mortgages, Deeds of Trust, and Foreclosure Litigation, §2.21 .

I. Substitution of Trustee

The deed of trust names the trustee. Private lenders often use form deeds of trust supplied by title companies, which identify the title company as trustee. Because many title companies no longer handle foreclosures, the beneficiary may need to substitute one of the following to serve as the foreclosing trustee and to conduct the sale:

A foreclosure company;

Another title company; or

A private person or entity.

Deeds of trust almost always contain a provision for changing or "substituting" the trustee. The substitution provision typically vests the power to appoint a new trustee in the beneficiary alone. However, the deed of trust will occasionally require that the trustor and the beneficiary act jointly to substitute in a new trustee. In rare instances, the deed of trust will require that, in addition to the consent of the beneficiary (and, sometimes, the trustor), the original trustee must convey title to the substituted trustee.

II. Substitution Procedures

Civil Code section 2934a provides a procedure for substitution of trustees and a procedure by which the selected potential trustee may resign or refuse to accept appointment. Although Civil Code section 2934a, subdivision (a)(1) states that the statutory procedure controls despite any contrary provision in a deed of trust, the procedure need not be followed if alternative provisions in the deed of trust are followed. (See Jones v. First Am. Title Ins. Co. (2003) 107 Cal.App.4th 381 ; U.S. Hertz, Inc. v. Niobrara Farms (1974) 41 Cal.App.3d 68, 84 .) But Civil Code section 2934a applies only when the deed of trust confers on the trustee "no other duties" than those incidental to exercising the power of sale. If other duties are conferred, the instrument will likely control.

Under Civil Code section 2934a, subdivision (a)(1) , a substitution of trustees may be effected by recordation of, in the county in which the property is located, a substitution executed and acknowledged by all the beneficiaries under the deed of trust or their successors in interest. The substitution must contain ( Civ. Code, § 2934a, (a)(4) ):

The date on which the deed of trust was recorded;

The name of the trustor;

The book and page or instrument number where the deed of trust is recorded; and

The name of the new trustee.

Creditor's counsel should review the deed of trust (including the substitution clause) before the trustee sale proceedings commence. Beneficiaries should not delay the process of substituting the trustee, because a late substitution may jeopardize foreclosure rights or delay the trustee sale process.

Additionally, trustees may resign or refuse to accept appointment at their own election and without the consent of beneficiaries or their authorized agents. ( Civ. Code, § 2934a, subd. (d)(2) .) The trustee must promptly give written notice of that resignation or refusal to the beneficiary or beneficiaries or their authorized agents by ( Civ. Code, § 2934a, subd. (d)(2)(A) ):

Sending a registered or certified envelope, with postage prepaid, to all beneficiaries or their authorized agents at the address shown on the last-recorded substitution of trustee for that real property; and

Recording a notice of resignation of trustee in each county in which the substitution of trustee under which the trustee was appointed is recorded.

The resignation becomes effective when all notices of resignation are recorded. ( Civ. Code, §2934a, subd. (d)(2)(B) .) No action required to be performed by the trustee under California law or under the mortgage or deed of trust may be taken until a substituted trustee is validly appointed. ( Civ. Code, § 2934a, subd. (d)(2)(C) .) This procedure constitutes "the exclusive procedure for a trustee to either resign or refuse to accept appointment as trustee." ( Civ. Code, § 2934a, subd. (d)(3) .)

III. Effect of Substitution on Validity of Notices

Requirements for service of a copy of the substitution on all persons entitled to receive notice of default are in Civil Code section 2934a, subdivisions (b)–(c) . Since January 1, 2005, these provisions have:

Allowed the substituted trustee to act before recordation of the substitution ( Civ. Code, § 2934a, subd. (d)(1) ); and

Specified the required timing for service of the substitution so that recipients of notices of default or sale are aware of the substitution before the sale ( Civ. Code, § 2934a, subds. (b), (c) ).

(See Stats. 2004, ch. 177, § 5 ; Senate Judiciary Committee Analysis of SB 1277 (Apr. 13, 2004).)

Notably, a potential substituted trustee may resign or refuse to accept appointment as trustee without the consent of the beneficiaries or their authorized agents. That procedure is outlined in Civil Code section 2934a, subdivision (d)(2) . If the substitution is executed (but not recorded) before or concurrently with the recordation of the notice of default, then a copy of the substitution must be mailed before or concurrently with the recordation of the notice of default. ( Civ. Code, § 2934a, subd. (b) .) If the substitution is effected after the notice of default has been recorded but before the recordation of the notice of sale, a copy of the substitution must be mailed before or concurrently with the recordation of the notice of sale. ( Civ. Code, § 2934a, subd. (c) .) The language in Civil Code section 2934a, subdivision (c) has been interpreted to mean that execution of the substitution may occur after recordation of the notice of default. (See Ram v. OneWest Bank , FSB (2015) 234 Cal.App.4th 1, 12 .) In either event, the substituted trustee is authorized to act as the trustee under the mortgage or deed of trust from the date the substitution is executed. ( Civ. Code, § 2934a, subd. (d)(1) .) Once recorded, the substitution constitutes conclusive evidence of the substituted trustee's authority to conduct the trustee sale. (See Civ. Code, § 2934a, subd. (d)(1) .)

IV. Substitution Under Multiple Deeds of Trust

Provisions for substituting trustees under multiple deeds of trust recorded in the same county are found in Civil Code section 2934a, subdivision (a)(4) . Alternatively, under Civil Code section 2934a, subdivision (a)(1) , if the deed of trust secures multiple notes in favor of multiple beneficiaries or if it secures a single note in which the beneficiaries have undivided interests "equivalent to a series transaction," the trustee substitution may be executed by a 50 percent-plus majority of deed of trust beneficiaries. In that event, the substitution must be made in compliance with the procedure specified in Civil Code section 2934a, subdivision (a)(2)–(3) . The procedure is similar to that of a "Majority Action Affidavit," described in Civil Code section 2941.9, subdivision (d) , but without the prior written agreement by all beneficiaries or inclusion of the authorization in the deed of trust required by Civil Code section 2941.9, subdivisions (b)–(c) . At their own election, potentially substituted trustees may resign or refuse to accept appointment, without the consent of beneficiaries or their authorized agents. That procedure is outlined in Civil Code section 2934a, subdivision (d)(2) .

V. Effect of Trustee Substitution or Note Assignment on Trustee’s Authority

A party who is not the trustee of record will not have the authority to conduct the foreclosure or deliver a valid trustee's deed. (See Pro Value Props. v. Quality Loan Serv. Corp. (2009) 170 Cal.App.4th 579 .) In fact, one appellate court held entirely void a purported sale by a former trustee who had been substituted out as trustee of record before foreclosure. (See Dimock v. Emerald Props. (2000) 81 Cal.App.4th 868 .) In addition, a defrauded lender's deed of trust, purportedly secured by property sold to borrowers in a fraudulent trustee sale conducted by an improper trustee, is void. Thus, the defrauded lender has no valid interest in the property and cannot maintain a quiet title action against a preexisting lienholder. (See WFG Nat'l Title Ins. Co. v. Wells Fargo Bank (2020) 51 Cal.App.5th 881 .)

However, another court used "reformation" to validate a foreclosure sale under Civil Code section 2934a when the former trustee mistakenly conducted the sale after a new trustee had been substituted. (See Jones v. First Am. Title Ins. Co. (2003) 107 Cal.App.4th 381 ; see also Rossberg v. Bank of America (2013) 219 Cal.App.4th 1481, 1495 [ even though notary acknowledged substitution of trustee, who then recorded substitution, and these events occurred more than 2 months after trustee recorded notice of default, trustee did not lack authority to foreclose because substitution was executed by beneficiary before trustee recorded notice of default ].)

In addition, a defect in a notice of default that does not affect the legal status of the parties at the time of the trustee sale "cannot become an immutable obstacle, in perpetuity, to the lender's efforts to recover." ( Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 17 .) Distinguishing the facts of the case from Dimock , the Ram court found that a foreclosure sale was at worst voidable , not void, when an entity inaccurately recorded its notice of default "as trustee" before it was formally named as such. The court reasoned that the defect caused no prejudice because the entity was effectively substituted as trustee before recordation of the notice of sale and subsequent trustee's deed. ( Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1 .)

Some lenders regularly substitute themselves in as trustee in anticipation of performing tasks such as execution and recordation of deeds of partial reconveyance. Lenders must take care not to rely on the former (substituted out) trustee to conduct a later foreclosure unless that trustee is formally substituted back in.

Possession of original loan documents will often lag behind both assignments of beneficial interests in the loan or deed of trust and substitutions of trustees, and it has become fairly common for those seeking to prevent, delay, or set aside foreclosure to rely on arguments concerning:

The reliability of documents purporting to assign the note and deed of trust or substitute the trustee; or

Possession of the original loan documents, particularly the note.

(See, e.g. , Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 935 [ when defects render assignment void and not merely voidable, borrower may challenge, in action for wrongful foreclosure, defective assignment of note and deed of trust to foreclosing party, even if borrower is not party to assignment agreement ]; Sciarratta v. U.S. Bank (2016) 247 Cal.App.4th 552 [ following Yvanova in holding that foreclosure sale was wrongful in that trustee was not proper trustee at time of sale and thus sale was void, or alternatively, party that ordered sale and acquired property by way of credit bid was neither holder of note nor beneficiary of deed of trust ]; see also Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270 [ following Sciarratta and holding similarly ]; Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 [ borrower has standing to challenge void assignment of loan occurring after trust's closing date even if borrower is not party to (or third party beneficiary of) assignment agreement between lender and its successors ]; Herrera v. Deutsche Bank (2011) 196 Cal.App.4th 1366 [ denying summary judgment because defendants failed to factually establish that one defendant was beneficiary under deed of trust and other was trustee having authority to conduct foreclosure sale ]; but see Shuster v. BAC Home Loans Servicing (2012) 211 Cal.App.4th 505 [ borrowers sued to set aside sale, alleging lack of authority to foreclose as well as existence of irregularities in loan assignment and foreclosure process; court of appeal upheld trial court's conclusion that omission of trustee did not prevent enforcement of deed of trust and such defect was cured in any event because lender appointed "substituted" trustee ].)

A variation on the "show me the note" argument was similarly rejected in Yazdanpanah v. Sacramento Valley Mortgage Group (N.D.Cal., Nov. 30, 2009, No. C 09–02024 SBA) 2009 U.S. Dist. Lexis 111557 [ court found no support in California law for proposition that foreclosing parties (lender and trustee) must have possession of original note before initiating nonjudicial foreclosure ]. In Azzini v. Countrywide Home Loans (S.D.Cal., Dec. 29, 2009, No. 09cv787 DMS (CAB)) 2009 U.S. Dist. Lexis 120599 , the court rejected an argument that a nonjudicial foreclosure sale was improper when conducted by a loan servicer not in possession of the note. (See also Hafiz v. Greenpoint Mortgage Funding, Inc. (N.D.Cal. 2009) 652 F.Supp.2d 1039, 1043 .) Other courts have reached the same conclusion. (See, e.g. , Debrunner v. Deutsche Bank Nat'l Trust Co. (2012) 204 Cal.App.4th 433 [ holding that physical possession of original promissory note is not required under Civ. Code, § 2924, subd. (a)(1) to commence nonjudicial foreclosure ].)

But some courts have endorsed a cause of action for wrongful foreclosure under Civil Code section 2924, subdivision (a)(1) if a void—and not merely voidable—assignment of the loan caused an entity that was not the actual beneficiary to foreclose by exercising the power of sale in the deed of trust. (See, e.g. , Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919 ; Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 .) The loan assignment was declared to be void in Glaski because it violated a New York statute governing trusts into which securitized loans are transferred.

The New York case on which Glaski relied for its finding that the assignment at issue was void (rather than merely voidable) was subsequently overturned, and more recent cases consistently hold that under New York law, an assignment that fails to comply with the terms of a trust agreement is merely voidable and not void . (See, e.g. , Kalnoki v. First Am. Trustee Servicing Solutions (2017) 8 Cal.App.5th 23 ; Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252 ; Saterbak v. JPMorgan Chase Bank (2016) 245 Cal.App.4th 808 ; In re Jepson (7th Cir. 2016) 816 F.3d 942 .)

Sometimes, a lender's most straightforward defense against a claimed void note or deed of trust assignment is judicially noticeable documents. (See Brown v. Deutsche Bank (2016) 247 Cal.App.4th 275, 282 [ affirming trial court's order dismissing case on demurrer when plaintiff's challenge to assignment was "flatly contradicted" by judicially noticed documents ].)

Borrowers have been more successful in their "produce the note" defenses in bankruptcy court when lenders have sought to obtain relief from the automatic bankruptcy stay to foreclose. (See, e.g. , In re Lee (Bankr. C.D.Cal. 2009) 408 B.R. 893 ; In re Hwang (Bankr. C.D.Cal. 2008) 393 B.R. 701 , rehearing granted and opinion modified (Bankr. C.D.Cal. 2008) 396 B.R. 757 , rev'd on other grounds (C.D.Cal. 2010) 438 B.R. 661 .)

When there is a legitimate question whether the purported creditor holding the mortgage is in fact the holder of the note or the valid assignee of either, borrowers' attorneys should consider whether they can or should litigate the issue of ownership of the note in bankruptcy court.

Challenges in California to the Mortgage Electronic Registration System's (MERS's) authority to foreclose have also been mostly unsuccessful. Many cases reasoned that (1) because the deed of trust specifically designated MERS as the nominee of the lender and granted MERS the power to foreclose on behalf of the lender and its assignees, and (2) because of the broad authority to foreclose granted to trustees, mortgagees, beneficiaries, and their authorized agents by Civil Code section 2924, subdivision (a)(1) , MERS could proceed with nonjudicial foreclosure despite other statutory violations or documentation discrepancies. (See, e.g. , Calvo v. HSBC Bank USA (2011) 199 Cal.App.4th 118 ; Robinson v. Countrywide Home Loans (2011) 199 Cal.App.4th 42 ; Gomes v. Countrywide Home Loans (2011) 192 Cal.App.4th 1149 ; Davidson v. Countrywide Home Loans (S.D.Cal., Mar. 16, 2010, No. 09-CV-2694-IEG (JMA)) 2010 U.S. Dist. Lexis 24589 .)

However, challenges to nonjudicial foreclosure based on "backdated assignments" of loans in which MERS was the beneficiary have been allowed when the backdated assignments call into question whether the foreclosing putative beneficiary was the beneficiary at the time the notice of default was recorded. (See Naranjo v. SBMC Mortgage (N.D.Cal., July 24, 2012, No. 11-cv-2229-L-WVG) 2012 U.S. Dist. Lexis 103735 [ role of nominee was not central in this action as it was in Gomes ; rather, borrower alleges that transfer of loan rights to loan trust was improper, and thus defendants lacked legal right to either collect on note or enforce underlying security interest ]; Tamburri v. Suntrust Mortgage, Inc. (N.D.Cal., Dec. 15, 2011, No. C-11–2899 EMC) 2011 U.S. Dist. Lexis 144442 .) The Tamburri court, after an extensive discussion of Gomes and other similar decisions, directly challenged the reasoning in Gomes and some of the "archaic" authorities and doctrines that decision is claimed to invoke. In a subsequent decision, the court in Tamburri v. Suntrust Mortgage, Inc. (N.D.Cal. 2012) 875 F.Supp.2d 1009, 1024 fn. 4 , reiterated that parties initiating foreclosure must have authority to foreclose. (See also Lester v. J.P. Morgan Chase Bank (N.D.Cal. 2013) 926 F.Supp.2d 1081 [ distinguishing Gomes because issue in Gomes was not whether wrong entity had initiated foreclosure; rather, issue was whether company selling property in nonjudicial foreclosure sale (MERS) was authorized to do so by owner of promissory note ].)

It appears that amendments to Civil Code sections 2923.55, subdivision (b)(1)(B)(iii) , 2924, subdivision (a)(6) , and 2924.17, subdivision (b) , enacted in 2012 as part of the Homeowner Bill of Rights (HBOR), offer more tenable causes of action in these types of cases. For example, see Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 941 fn. 14 , citing Civ. Code, § 2924, subd. (a)(6) , which forbids an entity from recording (or causing a notice of default to be recorded) or otherwise initiating a trustee sale unless it is the holder of the beneficial interest under the deed of trust, the original or substituted trustee under the deed of trust, or the "designated agent of the holder of the beneficial interest." The rule applies to both residential and commercial mortgage loans. (See also Bank of N.Y. Mellon v. Preciado (2013) 224 Cal.App.4th Supp 1, 10 [ plaintiff in postforeclosure eviction action must necessarily prove trustee sale was conducted by duly appointed trustee ].)

VI. Trustee Liability

A trustee's primary responsibility is to the lender and the borrower. For example, a trustee under a deed of trust owes a duty to conduct the sale fairly and openly and to secure the best possible price for the benefit of the borrower. ( Civ. Code, § 2924g ; Nomellini Constr. Co. v. Modesto Sav. & Loan Ass'n (1969) 275 Cal.App.2d 114 ; Hill v. Gibraltar Sav. & Loan Ass'n (1967) 254 Cal.App.2d 241 .) A trustee may also incur liability to third parties, such as prospective bidders, when it engages in deceptive acts to thwart the competitive bidding process. ( Block v. Tobin (1975) 45 Cal.App.3d 214 .)

When a former trustee or an improperly substituted trustee mistakenly conducts a foreclosure sale and conveys title to the highest bidder, numerous parties, including subsequent purchasers, may suffer losses, including costs and attorney fees incurred in attacking or defending the sale. (See, e.g. , Heritage Oaks Partners v. First Am. Title Ins. Co. (2007) 155 Cal.App.4th 339 .) Although the courts in these circumstances may either invalidate the sale (see, e.g. , Pro Value Props. v. Quality Loan Serv. Corp. (2009) 170 Cal.App.4th 579 ; Dimock v. Emerald Props. (2000) 81 Cal.App.4th 868 ) or validate it by applying equitable relief (see, e.g. , Jones v. First Am. Title Ins. Co. (2003) 107 Cal.App.4th 381 ), a damages action by a subsequent purchaser of the property will not lie against the trustee, who has a limited role as the common agent of the borrower and the lender. (See, e.g. , Heritage Oaks Partners v. First Am. Title Ins. Co. (2007) 155 Cal.App.4th 339 , in which a subsequent purchaser sued to recover damages sustained in the ensuing postsale lawsuits, asserting causes of action for negligence and equitable subrogation against the former trustee, which had conducted the sale when it was no longer trustee of record. The court, relying on I.E. Assocs. v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281 , construed the role of the trustee narrowly, ruled that the trustee owed no duty to the purchaser, and refused to allow the purchaser to recover any damages. (See also Citrus El Dorado, LLC v. Chicago Title Co. (2019) 32 Cal.App.5th 943 [ substitute trustee had no duty to verify that beneficiary received valid assignment or to verify authority of person who signed substitution of trustee ]. This insulation of the trustee from the claims of bidders and other nonparties to the deed of trust or mortgage, however, should not be taken as necessarily holding the trustee immune from potential liability to its principals (the trustor and beneficiary) and others when the trustee negligently, deceitfully, or unlawfully performs the narrow and ministerial tasks required of the trustee under a deed of trust.

A trustee under a deed of trust is likewise not responsible for making an effort to track down junior secured creditors who have not recorded a request for special notice for purposes of either giving them notice of the sale or identifying them as parties entitled to receive a distribution of foreclosure sale proceeds. ( Banc of America Leasing & Capital v. 3 Arch Trustee Servs. (2009) 180 Cal.App.4th 1090 .)

A trustee's actions in a nonjudicial foreclosure ( i.e., the recordation, mailing, publication, and delivery of statutory notices and trustee's deed after sale) and the execution of statutory nonjudicial foreclosure procedures are privileged communications under Civil Code section 47 . ( Civ. Code, § 2924, subd. (d) ; Schep v. Capital One (2017) 12 Cal.App.5th 1331, 1336 .) Accordingly, the trustee's recordation of a notice of default on instruction by the lender (or other performance of trustee functions under statutory law) is not actionable in tort unless the trustee acted with malice or reckless disregard. ( Kachlon v. Markowitz (2008) 168 Cal.App.4th 316 [ rejecting claims by borrower against trustee for slander of title and negligence, but allowing claims against lender for equitable relief, tort damages, and attorney fees ]; Mehta v. Wells Fargo Bank (S.D.Cal. 2010) 737 F.Supp.2d 1185, 1194 ; Arthur v. JPMorgan Chase Bank (N.D.Cal, May 17, 2011, No. C 11–435 SI) 2011 U.S. Dist. Lexis 52709 [ denied motion to dismiss claim against trustee, who violated statutory notice requirements; whether trustee acted with malice or reckless disregard was question of fact ]; Lundy v. Selene Fin., LP (N.D.Cal., Mar. 17, 2016, No. 15-cv-05676-JST) 2016 U.S. Dist. Lexis 35547 [ holding trustee's recordation of notice of default and execution of trustee sale at direction of beneficiary was privileged under Civ. Code, §47 , but allowing claims to proceed against loan servicer who made substantive decision to foreclose ].)

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Commercial foreclosures, document outline.

Assignment of Deed of Trust (Commercial Real Estate Loan) (TX) | Practical Law

Assignment of Deed of Trust (Commercial Real Estate Loan) (TX)

Practical law standard document w-035-0853 (approx. 18 pages).

Presale Report

Sequoia Mortgage Trust 2024-4 (US RMBS)

Mon 01 Apr, 2024 - 3:33 PM ET

Key Rating Drivers High-Quality Mortgage Pool (Positive): The collateral consists of 347 loans totaling approximately $404.3 million and seasoned at approximately three months in aggregate, as determined by Fitch. The borrowers have a strong credit profile, with a weighted-average Fitch model FICO score of 774 and 34.5% debt-to-income (DTI) ratio, and moderate leverage, with an 80.2% sustainable loan-to-value (sLTV) ratio, and 71.2% mark-to-market combined loan-to-value (cLTV) ratio. Overall, the pool consists of 92.5% in loans where the borrower maintains a primary residence, while 7.5% are of a second home or investor property; 71.0% of the loans were originated through a retail channel. Additionally, 100.0% of the loans are designated as qualified mortgage (QM) loans. Updated Sustainable Home Prices (Negative): Due to Fitch’s updated view on sustainable home prices, Fitch views the home price values of this pool as 10.8% above a long-term sustainable level (versus 11.1% on a national level as of 3Q23, which was up 1.7% since the prior quarter). Home prices increased 5.5% yoy nationally as of December 2023, despite modest regional declines, but are still being supported by limited inventory.

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Blackstone Mortgage Trust Announces First Quarter 2024 Earnings Release and Conference Call

Blackstone Mortgage Trust, Inc. (NYSE: BXMT) (the “Company”) today announced that it will publish its first quarter 2024 earnings presentation on its website at www.bxmt.com and file its Form 10-Q pre-market on Wednesday, April 24, 2024. The Company will also host a conference call the same day at 9:00 a.m. ET to review results.

To register for the webcast, please use the following link: https://event.webcasts.com/starthere.jsp?ei=1662838&tp_key=6e92f5954b

For those unable to listen to the live broadcast, there will be a webcast replay on the Company's website at www.bxmt.com beginning approximately two hours after the event.

About Blackstone Mortgage Trust

Blackstone Mortgage Trust (NYSE: BXMT) is a real estate finance company that originates senior loans collateralized by commercial real estate in North America, Europe, and Australia. Our investment objective is to preserve and protect shareholder capital while producing attractive risk-adjusted returns primarily through dividends generated from current income from our loan portfolio. Our portfolio is composed primarily of loans secured by high-quality, institutional assets in major markets, sponsored by experienced, well-capitalized real estate investment owners and operators. These senior loans are capitalized by accessing a variety of financing options, depending on our view of the most prudent strategy available for each of our investments. We are externally managed by BXMT Advisors L.L.C., a subsidiary of Blackstone. Further information is available at www.bxmt.com .

About Blackstone

Blackstone is the world’s largest alternative asset manager. We seek to create positive economic impact and long-term value for our investors. We do this by relying on extraordinary people and flexible capital to help strengthen the companies we invest in. Our over $1 trillion in assets under management include investment vehicles focused on private equity, real estate, public debt and equity, infrastructure, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com . Follow @blackstone on LinkedIn , X (Twitter) and Instagram .

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A photo composite of Donald Trump on the left, blurry and in the background, speaking into a mic in front of a US flag, and computer screen on right shows black screen and Truth social.

Exclusive: Trump Media saved in 2022 by Russian-American under criminal investigation

Trump’s social media company went public relying partly on loans from trust managed by person of interest to prosecutors

Donald Trump’s social media company Trump Media managed to go public last week only after it had been kept afloat in 2022 by emergency loans provided in part by a Russian-American businessman under scrutiny in a federal insider-trading and money-laundering investigation.

The former US president stands to gain billions of dollars – his stake is currently valued at about $4bn – from the merger between Trump Media and Technology Group and the blank-check company Digital World Acquisition Corporation, which took the parent company of Truth Social public.

But Trump Media almost did not make it to the merger after regulators opened a securities investigation into the merger in 2021 and caused the company to burn through cash at an extraordinary rate as it waited to get the green light for its stock market debut.

The situation led Trump Media to take emergency loans, including from an entity called ES Family Trust, which opened an account with Paxum Bank, a small bank registered on the Caribbean island of Dominica that is best known for providing financial services to the porn industry.

Through leaked documents, the Guardian has learned that ES Family Trust operated like a shell company for a Russian-American businessman named Anton Postolnikov, who co-owns Paxum Bank and has been a subject of a years-long joint federal criminal investigation by the FBI and the Department of Homeland Security (DHS) into the Trump Media merger.

The existence of the trust was first reported by the Guardian last year. However, who controlled the account, how the trust was connected to Paxum Bank, and how the money had been funneled through the trust to Trump Media was unknown.

The new details about the trust are drawn from documents including: Paxum Bank records showing Postolnikov having access to the trust’s account, the papers that created the trust showing as its settlor a lawyer in St Petersburg, Russia, and three years of the trust’s financial transactions.

The concern surrounding the loans to Trump Media is that ES Family Trust may have been used to complete a transaction that Paxum itself could not.

Paxum Bank does not offer loans in the US as it lacks a US banking license and is not regulated by the FDIC. Postolnikov appears to have used the trust to loan money to help save Trump Media – and the Truth Social platform – because his bank itself could not furnish the loan.

Postolnikov, the nephew of Aleksandr Smirnov, an ally of Russian president Vladimir Putin , has not been charged with a crime. In response to an email to Postolnikov seeking comment, a lawyer in Dominica representing Paxum Bank warned of legal action for reporting the contents of the leaked documents.

There is also no indication that Trump or Trump Media had any idea about the nature of the loans beyond that they were opaque, nor has the company or its executives been accused of wrongdoing. A spokesperson for Trump Media did not respond to a request for comment.

But Postolnikov has been under increasing scrutiny in the criminal investigation into the Trump Media merger. Most recently, he has been listed on search warrant affidavits alongside several associates – one of whom was indicted last month for money laundering on top of earlier insider-trading charges.

Postolnikov and the trust

In late 2021, Trump Media was facing financial trouble after the original planned merger with Digital World was delayed indefinitely when the Securities and Exchange Commission opened an investigation into the merger, Trump Media’s since-ousted co-founder-turned-whistleblower Will Wilkerson recounted in an interview.

Part of the problem was that Trump Media struggled to get financing because traditional banks were reluctant to lend millions to Trump’s social media company in the wake of the January 6 Capitol attack, Wilkerson said.

Trump Media eventually found some lenders, including ES Family Trust, but the sequence of events was curious.

ES Family Trust was established on 18 May 2021, its creation papers show. Postolnikov’s “user” access to the account was “verified” on 30 November 2021 by a Paxum Bank manager in Dominica . The trust was funded for the first time on 2 December 2021.

Trump Media then received the loans from ES Family Trust: $2m on 23 December 2021, and $6m on 17 February 2022.

The loans came in the form of convertible promissory notes, meaning ES Family Trust would gain a major stake in Trump Media because it was offering the money in exchange for Trump Media agreeing to convert the loan principal into “shares of Company Stock”.

Oddly, the notes were never signed. But the investment in Trump Media proved to be huge: while precise figures can only be known by Trump Media, ES Family Trust’s stake in Trump Media is worth between $20m and $40m even after the sharp decline of the company’s share price in the wake of a poor earnings report.

The ES Family Trust account also appears to have benefited Postolnikov personally. As the criminal investigation into the Trump Media deal intensified towards the end of last year, the trust recorded several transfers to Postolnikov with the subject line “Partial Loan Return”.

In total, the documents showed that the trust transferred $4.8m to Postolnikov’s account, although $3m was inexplicably “reversed”.

(On 17 July 2023, Postolnikov received $300,000. On 17 October 2023, Postolnikov received $1.5m, before it was reversed the next day; later the same day, Postolnikov again received $1.5m, which was also reversed. On 19 October 2023, Postolnikov received the $1.5m for a third and final time.)

The reason for the trust’s creation remains unknown. Aside from the money that went to Trump Media, the trust’s statements show the trust has directly invested money with only two other companies: $10.8m to Eleven Ventures LLC, a venture capital firm, and $1m to Wedbush Securities, a wealth management firm.

The current status of ES Family Trust is also unknown. The trust’s address is listed as a residential home in Hollywood, Florida. But, according to the property website Redfin, the six-bedroom home appears to have been sold in December 2023.

The creation papers also contained something notable: a declaration that, if the original trustee – a Paxum employee named Angel Pacheco – stepped down from the role, his successor would be a certain individual named Michael Shvartsman.

Sprawling money-laundering probe

Last month, federal prosecutors charged Michael Shvartsman, a close associate of Postolnikov, with money laundering in a superseding indictment after previously charging him and two others in July with insider-trading Digital World shares. Shvartsman and his co-defendants pleaded not guilty.

At least part of the evidence against Shvartsman came from a confidential informant for the DHS, court filings show: in one March 2023 meeting with the informant and an associate, Shvartsman mentioned a friend who owned a bank in Dominica and made bridge loans to Trump Media.

“[Shvartsman] stated that a friend of his owns a bank in the island of Dominica and would be able to provide banking services to Russian and Ukraine Nationals if the [confidential informant] had other clients in need of that service,” the DHS report said .

“[Shvartsman’s associate] told the [confidential informant] that he does not think the SEC would be able to go after [Shvartsman] for his part in the investment but mentioned that [Shvartsman] essentially provided ‘bridge financing’ for the firm behind the Truth Social media platform,” it said.

The unredacted parts of the DHS report do not specify whether the “friend” was Postolnikov and what the “bridge financing” referred to – but the report left open the possibility that Shvartsman also had a role with the trust.

A lawyer for Shvartsman declined to comment on his client’s relationship with Postolnikov. A spokesperson for the US attorney’s office for the southern district of New York also declined to comment.

It is unclear whether federal prosecutors are aware that Trump Media was propped up by Postolnikov via ES Family Trust. At the same time, the money-laundering investigation surrounding the Trump Media merger and the scrutiny on Postolnikov appears to have ballooned in recent months.

The investigation into potential money laundering appears to have started after Wilkerson’s lawyers Phil Brewster, Stephen Bell and Patrick Mincey alerted the US attorney’s office in the southern district of New York to the ES Family Trust loans in October 2022.

Months later, in June 2023, the FBI expanded its investigation to work jointly with the Department of Homeland Security’s El Dorado task force, which specializes in money laundering, and its Illicit Proceeds and Foreign Corruption group, which targets corrupt foreign officials who use US entities to launder illicit funds.

Donald Trump
Social media
Digital media
Vladimir Putin

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Covers energy, agriculture and politics in Western Canada with the energy transition a key area of focus. Has done short reporting stints in Afghanistan, Pakistan, France and Brazil and covered Hurricane Michael in Florida, Tropical Storm Nate in New Orleans and the 2016 Alberta wildfires and the campaign trails of political leaders during two Canadian election campaigns.

Nivedita Balu is a correspondent for Reuters based in Toronto, where she reports on Canadian banks and financial services. She previously covered U.S. tech, media and telecom companies, and consumer and retail companies in Bengaluru.

The Wider Image: Reindeer herders battle power line needed for Norway's climate goal

Transpetro, the logistics arm of Brazil's state-run oil firm Petrobras is analyzing projects to supply all its 48 terminals with renewable energy, the subsidiary's director of ducts and terminals Marcio Guimaraes said, ahead of the inauguration of a solar plant in Sao Paulo state on Tuesday.

UK's Virgin Atlantic on course to return to profitability

Richard Branson's Virgin Atlantic said on Wednesday it would return to profitability this year after strong demand from holiday makers drove revenue up by 265 million pounds ($333 million) to a record 3.1 billion pounds in 2023.

Henrik Fisker, CEO of electric-vehicle maker Fisker Inc

IMAGES

Trust Property Declaration Of Trust Template
Loan transfer
Notice of Assignment
Loan Trust
Assignment of Deed of Trust by Individual Mortgage Holder Texas Form
Trust Receipt Loans

COMMENTS

Deed Of Trust: What It Is And How It Works
An assignment of trust deed is necessary if a lender sells a loan secured by a trust deed. It assigns the trust deed to whoever buys the loan (such as another lender), granting them all the rights ...
What's the difference between a mortgage assignment and an ...
The purpose of the mortgage or deed of trust is to provide security for the loan that's 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 ...
Understanding the Assignment of Mortgages: What You Need To Know
The assignment of mortgage needs to include the following: The original information regarding the mortgage. Alternatively, it can include the county recorder office's identification numbers. The borrower's name. The mortgage loan's original amount. The date of the mortgage and when it was recorded.
Transferring Assets to Your Trust
The Assignment of Mortgage is signed by you, notarized, and attached to the original document. If an original mortgage was recorded, we can record the Assignment. However, a note can be endorsed directly to the Trustee by writing on the Note: ... Loans Against Your Home: You should know that if there is a mortgage or deed of trust loan on your ...
Loan trusts
A loan trust involves an individual establishing a trust. But rather than making a gift, the settlor lends money to the trust. The trustees then invest this money, typically into an investment bond, for the benefit of the trust beneficiaries. ... Assigning segments to the settlor to satisfy the outstanding loan will be treated as an assignment ...
Loan trusts: options when dealing with the loan
Loan repayment to the settlor. Making a gift of the loan. Loan options following settlor's death - the importance of updating wills. Waiving the loan to the trust. Leaving the loan to spouse/civil partner. Leaving the loan to someone else. Leaving loan to spouse/civil partner if alive, or otherwise to trust.
What is an Assignment of Trust Deed?
Assignment. When a lender sells the loan, it assigns the trust deed to the buyer. "Assignment" means to convey a claim or a right to another party, known as the "assignee.". This is done by creating another legal document — the assignment of trust deed — and having it signed by both buyer and seller. The trust deed, and other ...
Dealing with the outstanding loan on loan trusts
Waive the loan to the trust i.e. make a gift of the loan to the trust. ... And remember that the assignment of a policy or policy segments to a beneficiary is an option if this would result in a ...
Using a deed of trust
Assignment of a deed of trust. Like any deed, a deed of trust can be transferred from one person to another, similar to the way a bank can sell a loan to another bank. The document that transfers a deed of trust, called an assignment of a deed of trust, must be filed in the county clerk's office to be valid.
The role of Loan Trusts
A typical Loan Trust is based on an individual establishing a trust with the intention of making a loan to the trustees, then executing a loan agreement with the trustees and transferring the funds to the trustees as a loan. In order to avoid any negative IHT consequences, the loan is specified to be interest free and repayable on demand.
Foreclosure Defenses: Is Your Mortgage Properly Assigned?
It endorses the promissory note (signs it over) to the new loan owner. The promissory note owner is the only party with the legal right (called "standing") to collect payment on the debt. Assignment. The seller also prepares an assignment of mortgage to the new entity and, usually, records the assignment in the county records.
Debt Assignment: How They Work, Considerations and Benefits
Debt Assignment: A transfer of debt, and all the rights and obligations associated with it, from a creditor to a third party . Debt assignment may occur with both individual debts and business ...
Understanding How Assignments of Mortgage Work
Mortgages are assigned using a document called an assignment of mortgage. This legally transfers the original lender's interest in the loan to the new company. After doing this, the original lender will no longer receive the payments of principal and interest. However, by assigning the loan the mortgage company will free up capital.
PDF A guide to the Loan Trust
What is the loan trust? The loan trust is an alternative to giving away capital for good How the loan trust works is explained in detail on page 5. Briefly, what happens is that you create a trust, for the benefit of your beneficiaries, and nominate the trustees (including yourself). You make a loan to the trustees, which is invested.
PDF Guide to your Loan Trust
repayment of the loan amount shown in the Loan Trust deed (and any additional loan agreements) you have completed. Once the loan is repaid, any amount in the trust fund will be held in trust for the beneficiaries. It would therefore be prudent for your trustees to keep a record of the outstanding loan and any loan repayments made to you.
What Is Assignment Of Mortgage?
The assignment of mortgage occurs because without a security instrument attached to the sale (aka the mortgage), this purchasing investor could, in theory, receive monthly mortgage payments, but hold no legal right to take action if you defaulted on making timely payments. Note that in some states, deeds of trust are used in place of mortgage ...
How To Set Up A Trust 2024 Guide
3. Identify the Trustee and Beneficiaries. 4. Choose What Assets to Transfer. 5. Create the Appropriate Legal Documents. Frequently Asked Questions (FAQs) Show more. A trust is a legal arrangement ...
Trust Loans to Beneficiaries: A Topic of Interest
Trust Loans to Beneficiaries: A Topic of Interest. April 27, 2021. For estate planning practitioners, loans are a versatile tool which can be utilized to accomplish a broad range of goals. The ongoing interest rate environment has generated many unique opportunities, as the Applicable Federal Rate ("AFR" - the IRS-mandated minimum ...
PDF Adding Trust Assignments
• Similarities to Loan Signings • Trust Vocabulary 101 • Delivery Agent Role • Presentation/Typical documents ... Certification of Trust Assignments to Trust • Assignment of Ownership to trust • Business • Digital Assets. Completion of Assignment Review for sign/notarization
Assignment Of Rents
An Assignment of Rents ("AOR") is used to grant the lender on a transaction a security interest in existing and future leases, rents, issues, or profits generated by the secured property, including cash proceeds, in the event a borrower defaults on their loan. The lender can use the AOR to step in and directly collect rental payments made ...
Assignment Of Loan: Definition & Sample
Under an assignment of loan, a lender (the assignor) assigns its rights relating to a loan agreement to a new lender (the assignee). Only the assignor's rights under the loan agreement are assigned. The assignor will still have to perform any obligations it has under the facility agreement. The debtor, the recipient of the loan, must be ...
Understanding When Substitution of Trustee Is Required and its ...
New Century Mortgage Corp. (2016) 62 Cal.4th 919, 935 [when defects render assignment void and not merely voidable, borrower may challenge, in action for wrongful foreclosure, defective assignment of note and deed of trust to foreclosing party, even if borrower is not party to assignment agreement]; Sciarratta v. U.S. Bank (2016) 247 Cal.App ...
Assignment of Deed of Trust (Commercial Real Estate Loan) (TX)
An assignment of deed of trust under Texas law. This Standard Document can be used to assign and transfer the beneficial interest under a Texas deed of trust from one lender to another lender. This Standard Document is intended for use with the financing of commercial properties in Texas and has integrated notes with important explanations and drafting and negotiating tips for both the ...
Sequoia Mortgage Trust 2024-4 (US RMBS)
Sequoia Mortgage Trust 2024-4 (US RMBS) Mon 01 Apr, 2024 - 3:33 PM ET. Key Rating Drivers High-Quality Mortgage Pool (Positive): The collateral consists of 347 loans totaling approximately $404.3 million and seasoned at approximately three months in aggregate, as determined by Fitch. The borrowers have a strong credit profile, with a weighted ...
Giants release former top catching prospect Joey Bart
April 1 - The San Francisco Giants designated former top catching prospect Joey Bart for assignment on Sunday. Bart, 27, was the No. 2 pick of the 2018 draft and was expected to be the heir to ...
Blackstone Mortgage Trust Announces First Quarter 2024 ...
Blackstone Mortgage Trust (NYSE: BXMT) is a real estate finance company that originates senior loans collateralized by commercial real estate in North America, Europe, and Australia.
Exclusive: Trump Media saved in 2022 by Russian-American under criminal
Trump Media then received the loans from ES Family Trust: $2m on 23 December 2021, and $6m on 17 February 2022. The loans came in the form of convertible promissory notes, meaning ES Family Trust ...
Austria's Signa gets 100 mln euro loan from Attestor
British investment fund Attestor Ltd. has granted Signa's Prime unit a loan of up to 100 million euros ($108 million) to boost the liquidity of the insolvent Austrian property company ...
Russia to reimburse banks for interest costs accrued in soldiers' loan
The Russian government will compensate banks that offered loan holidays to soldiers while they fight in Ukraine, according to legislation passed on Tuesday, covering 50% of the interest accrued on ...
Canada's Indigenous peoples eye big energy deals, await Trudeau loan
At least 38 Canadian energy projects were announced with Indigenous investment between 2022 and 2024, ranging in value from C$13 million to C$14.5 billion ($10.69 billion), according to the Fasken ...