New York, NY asked in Foreclosure, Real Estate Law and Tax Law for New York

Q: Sale of note, then sale of collateral, then forgiveness of debt confusion.

When a mortgage and note (one document, titled NOTE AND MORTGAGE) is sold, the creditor/lender/noteholder/mortgagee changes, but the debtor/borrower/mortgagor stays the same.

If the debtor/borrower/mortgagor then sells the mortgaged property (the deed to his house), subject to the mortgage, does the debt remain with the debtor/borrower/mortgagor?

If so, if the new noteholder forgives the debt, are they forgiving it to the original debtor/borrower/mortgagor or to the new owner of the collateral property?

1 Lawyer Answer
Elaine Shay
Elaine Shay
  • Foreclosure Defense Lawyer
  • New York, NY
  • Licensed in New York

A: When a lender assigns a note and mortgage, the debt remains with the borrower even if the property is sold subject to the mortgage.

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