Definition
The mortgage assignment clause is a standard provision in Canadian mortgage contracts allowing the lender to transfer their creditor right to a third party without the borrower's agreement.
**How it works**: - The original lender (assignor) transfers their receivable to a third party (assignee) - The borrower must be notified of the assignment but cannot oppose it - The mortgage terms (rate, conditions) remain unchanged for the borrower - The borrower now makes payments to the assignee
**Assignment contexts**: 1. **Securitization**: the lender sells the loan to an SPV for securitization (see securitization) 2. **Portfolio sale**: a distressed institution sells its receivables to another 3. **Bank merger**: receivables automatically migrate to the surviving entity 4. **Private lenders**: private loans are frequently assigned between investment funds
**Distinction between mortgage/loan**: - The receivable (the debt) can be freely assigned - The mortgage (the real right on the property) must be published at the Land Registry to be enforceable
**Borrower protection**: - The assignee cannot unilaterally modify the loan conditions - In case of dispute, the borrower can raise the same defences against the assignee as against the original assignor (e.g., abusive clause, lender breach)