Question

Dan had difficulty making the mortgage payments on his house, and the mortgage company, Leader Mortgage, was not sympathetic. In the end, Dan lost the house. Several years later, Dan's brother Jeremy bought a house. Following Dan's advice, he would not even consider getting his mortgage through Leader Mortgage. After shopping around, he secured his mortgage through Provident Home Mortgage. At the time, he told the agent about Dan's experience with Leader and gave that as one of the reasons why he chose Provident. Six months later, he was notified that Provident had assigned the loan to Leader, and that he should make his payments to Leader. Jeremy refused to make payments to Leader and sued Provident for transferring the loan to a company with which he refused to do business. A court will most likely: a. not honor the assignment, since Jeremy notified Provident that he did not want to deal with Leader. honor the assignment, because the right to receive money can be transferred. alow an alienation. honor the assignment, because its prohibition was not written into the contract.

Answer 1

Answer:

The court will most likely,

b.honor the assignment , because the right to receive money can be transferred.

as,despite Dan having informed his mind, before entering the contract with Provident,

In mortgage contracts, it is perfectly legal and as a matter of routine,lenders transfer/ sell mortgages. .

Some mortgages are transferred ,even multiple number of times before it is fully paid off , by the borrower.

And most importantly,the lenders need not also inform the borrowers , about the change.

The borrowers cannot legally object to the sale/transfer of the mortgage , to a third party

All the recourse, the borrower has , in such a situation, is---

when the new lender informs him , of the change, as a matter of procedure( for purposes of writing checks or for transfer of money),

the borrower can take his own decision,

whether to continue with the new lender , or apply for a new motgage to pay off this one & thus rescind this contract.

So, Jeremy's case will not stand in a court of law.

The other options cannot be the answer for the foll.reasons:

a. As can be undestood from above, Jeremy notifying , will not stand the legal test.

c.Alienation clause, is the buyer transferring his ownership rights & payment obligations to another party, that is change of borrower.

d.Assignment as such , does not need to be included in contract, unlike alienation clause,inclusion of which protects the lender , against doubtful payers as new owners.