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Serving
Massachusetts Agencies

Assignment

Mortgages

The case of Connecticut National Bank v. First Security Mortgage Corp., which came out of the federal court and demonstrated that it is very easy to pay the wrong party entitled to payment under a mortgage, states no new proposition of law:

"It is important to note that the assignee of a mortgage is under no obligation to give the mortgagor notice of the assignment, and if the mortgagor, after the assignment, makes payments on account of the principal of the note to the assignor of the mortgage without requiring the production of the note, such payments will not be valid as against the assignee." Crocker's Notes on Common Forms, Little Brown & Company (Seventh Edition, 1955), §523.

This is simply the application of the rule that whoever holds the note holds the mortgage. In fact, if the note alone is transferred and no assignment of the mortgage is recorded the holder of the note is the proper party to enforce the mortgage regardless of the status of the record title! See Lamson & Co., Inc. v. Abrams, 305 Mass. 238, 25 N.E.2d 374 (1940). The only exception to this common law rule is contained in G.L.c. 183, §54, which provides that one is entitled to take a discharge from the party who appears to hold the mortgage of record, regardless of who may hold the note.

Of course, Connecticut National Bank elaborates upon the proposition and is couched in terms of agency and the authority to act on behalf of a supposed principal.

Note now that the question of discharge(and affidavits which have the effect of discharges) are fully covered by G.L.c. 183, §§54C.