what does assignment of securities mean

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Trading Options: Understanding Assignment

The options market can seem to have a language of its own. To the average investor, there are likely a number of unfamiliar terms, but for an individual with a short options position—someone who has sold call or put options—there is perhaps no term more important than " assignment "—the fulfilling of the requirements of an options contract.

Options trading carries risk and requires specific approval from an investor's brokerage firm. For information about the inherent risks and characteristics of the options market, refer to the Characteristics and Risks of Standardized Options also known as the Options Disclosure Document (ODD).

When someone buys options to open a new position ("Buy to Open"), they are buying a right —either the right to buy the underlying security at a specified price (the strike price) in the case of a call option, or the right to sell the underlying security in the case of a put option.

On the flip side, when an individual sells, or writes, an option to open a new position ("Sell to Open"), they are accepting an obligation —either an obligation to sell the underlying security at the strike price in the case of a call option or the obligation to buy that security in the case of a put option. When an individual sells options to open a new position, they are said to be "short" those options. The seller does this in exchange for receiving the option's premium from the buyer.

Learn more about  options from FINRA or access free courses like Options 101 at OCC Learning .

American-style options allow the buyer of a contract to exercise at any time during the life of the contract, whereas European-style options can be exercised only during a specified period just prior to expiration. For an investor selling American-style options, one of the risks is that the investor may be called upon at any time during the contract's term to fulfill its obligations. That is, as long as a short options position remains open, the seller may be subject to "assignment" on any day equity markets are open. 

What is assignment?

An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security.

To ensure fairness in the distribution of American-style and European-style option assignments, the Options Clearing Corporation (OCC), which is the options industry clearing house, has an established process to randomly assign exercise notices to firms with an account that has a short option position. Once a firm receives an assignment, it then assigns this notice to one of its customers who has a short option contract of the same series. This short option contract is selected from a pool of such customers, either at random or by some other procedure specific to the brokerage firm. 

How does an investor know if an option position will be assigned?

While an option seller will always have some level of uncertainty, being assigned may be a somewhat predictable event. Only about 7% of options positions are typically exercised, but that does not imply that investors can expect to be assigned on only 7% of their short positions. Investors may have some, all or none of their short positions assigned.

And while the majority of American-style options exercises (and assignments) happen on or near the contract's expiration, a long options holder can exercise their right at any time, even if the underlying security is halted for trading. Someone may exercise their options early based upon a significant price movement in the underlying security or if shares become difficult to borrow as the result of a pending corporate action such as a buyout or takeover. 

Note: European-style options can only be exercised during a specified period just prior to expiration. In U.S. markets, the majority of options on commodity and index futures are European-style, while options on stocks and exchange-traded funds (ETF) are American-style. So, while SPDR S&P 500, or SPY options, which are options tied to an ETF that tracks the S&P 500, are American-style options, S&P 500 Index options, or SPX options, which are tied to S&P 500 futures contracts, are European-style options.

What happens after an option is assigned?

An investor who is assigned on a short option position is required to meet the terms of the written option contract upon receiving notification of the assignment. In the case of a short equity call, the seller of the option must deliver stock at the strike price and in return receives cash. An investor who doesn't already own the shares will need to acquire and deliver shares in return for cash in the amount of the strike price, multiplied by 100, since each contract represents 100 shares. In the case of a short equity put, the seller of the option is required to purchase the stock at the strike price.

How might an investor's account balance fluctuate after opening a short options position?

It is normal to see an account balance fluctuate after opening a short option position. Investors who have questions or concerns or who do not understand reported trade balances and assets valuations should contact their brokerage firm immediately for an explanation. Please keep in mind that short option positions can incur substantial risk in certain situations.

For example, say XYZ stock is trading at $40 and an investor sells 10 contracts for XYZ July 50 calls at $1.00, collecting a premium of $1,000, since each contract represents 100 shares ($1.00 premium x 10 contracts x 100 shares). Consider what happens if XYZ stock increases to $60, the call is exercised by the option holder and the investor is assigned. Should the investor not own the stock, they must now acquire and deliver 1,000 shares of XYZ at a price of $50 per share. Given the current stock price of $60, the investor's short stock position would result in an unrealized loss of $9,000 (a $10,000 loss from delivering shares $10 below current stock price minus the $1,000 premium collected earlier).

Note: Even if the investor's short call position had not been assigned, the investor's account balance in this example would still be negatively affected—at least until the options expire if they are not exercised. The investor's account position would be updated to reflect the investor's unrealized loss—what they could lose if an option is exercised (and they are assigned) at the current market price. This update does not represent an actual loss (or gain) until the option is actually exercised and the investor is assigned. 

What happens if an investor opened a multi-leg strategy, but one leg is assigned?

American-style option holders have the right to exercise their options position prior to expiration regardless of whether the options are in-, at- or out-of-the-money. Investors can be assigned if any market participant holding calls or puts of the same series submits an exercise notice to their brokerage firm. When one leg is assigned, subsequent action may be required, which could include closing or adjusting the remaining position to avoid potential capital or margin implications resulting from the assignment. These actions may not be attractive and may result in a loss or a less-than-ideal gain.

If an investor's short option is assigned, the investor will be required to perform in accordance with their obligation to purchase or deliver the underlying security, regardless of the overall risk of their position when taking into account other options that may be owned as part of the overall multi-leg strategy. If the investor owns an option that serves to limit the risk of the overall spread position, it is up to the investor to exercise that option or to take other action to limit risk. 

Below are a couple of examples that underscore how important it is for every investor to understand the risks associated with potential assignment during market hours and potentially adverse price movements in afterhours trading.

Example #1: An investor is short March 50 XYZ puts and long March 55 XYZ puts. At the close of business on March expiration, XYZ is priced at $56 per share, and both puts are out of the money, which means they have no intrinsic value. However, due to an unexpected news announcement shortly after the closing bell, the price of XYZ drops to $40 in after-hours trading. This could result in an assignment of the short March 50 puts, requiring the investor to purchase shares of XYZ at $50 per share. The investor would have needed to exercise the long March 55 puts in order to realize the gain on the initial multi-leg position. If the investor did not exercise the March 55 puts, those puts may expire and the investor may be exposed to the loss on the XYZ purchase at $50, a $10 per share loss with XYZ now trading at $40 per share, without receiving the benefit of selling XYZ at $55.

Example #2: An investor is short March 50 XYZ puts and long April 50 XYZ puts. At the close of business on March expiration, XYZ is priced at $45 per share, and the investor is assigned XYZ stock at $50. The investor will now own shares of XYZ at $50, along with the April 50 XYZ puts, which may be exercised at the investor's discretion. If the investor chooses not to exercise the April 50 puts, they will be required to pay for the shares that were assigned to them on the short March 50 XYZ puts until the April 50 puts are exercised or shares are otherwise disposed of.

Note: In either example, the short put position may be assigned prior to expiration at the discretion of the option holder. Investors can check with their brokerage firm regarding their option exercise procedures and cut-off times.

For options-specific questions, you may contact OCC's Investor Education team at [email protected] , via chat on OptionsEducation.org or subscribe to the OIC newsletter . If you have questions about options trading in your brokerage account, we encourage you to contact your brokerage firm. If after doing so you have not resolved the issue or have additional concerns, you can contact FINRA .

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Assignment of Rents – What, Why, and How?

Article by:

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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Out-Law Guide 10 min. read

Security in finance transactions

30 Aug 2011, 4:34 pm

When a borrower is granted a loan from a bank, the bank will often want security for the loan it makes.

Taking effective security over an asset means that the bank can, on the insolvency of the borrower, take possession of that asset, sell it and use the proceeds to repay the loan. This puts the bank in a stronger position than creditors who do not have security. Depending on the circumstances, the bank has the option of taking security over specific assets of the company or over all the assets of the company. If the bank chooses to do the latter a debenture will be used to create fixed and floating charges over all the property and assets of the company.

Under English law there are several types of security interest which are favoured by banks. This Guide will look at what these involve, along with their advantages and disadvantages.

Under a mortgage, ownership of an asset is transferred (by way of security for the loan) on the express or implied condition that it will be returned when the loan is repaid. What distinguishes a mortgage from an outright sale with a right of repurchase is that the transfer is only intended to secure the repayment of the debt. Transferring ownership enhances the lender's ability to sell the asset and receive cash in return if necessary, and prevents the borrower from disposing of the asset. A mortgage does not require the delivery of possession and so any kind of asset whether tangible (such as houses, ships or planes) or intangible (such as copyrights or patents) is capable of being mortgaged.

A mortgage can be legal or equitable. Under a legal mortgage, legal ownership of the property is transferred to the lender. An equitable mortgage is usually created where either a transaction does not meet the formal requirements of a legal mortgage but is recognised in equity (for example, a mortgage over property which the mortgagor does not yet own – a legal mortgage can only be created over property which exists at the time); or where the mortgage concerns property only recognised in equity (for example, an interest in a trust fund – a legal mortgage cannot be taken over property which is only recognised in equity).

Legal mortgage: This is the most secure and comprehensive form of security interest. As we have seen, it transfers ownership to the bank (the mortgagee) and so prevents the borrower (the mortgagor) from dealing with the mortgaged asset whilst it is subject to the mortgage. The formalities required for creating a legal mortgage depend on the type of property being secured, but include:

• the creation of a legal mortgage over land, which must be done by deed;
• a legal mortgage over debts or choses in action - rights under contracts – which is created by an absolute assignment, in writing, by the assignor which is not intended to be by way of charge. Written notice of this assignment must be given to the debtor, trustee or other person from whom the assignor would have been entitled to claim the debt or choses in action;
• legal mortgages over chattels – personal property – which do not generally require any formalities to make them effective providing that there is a valid agreement and the intention to create a legal mortgage;
• a legal mortgage over registered securities which is created by transferring those securities into the name of the mortgagee by novation – in essence, a new contract.  The mortgagee should be registered as the new holder of those securities;
• a legal mortgage of registrable intellectual property rights, which is created by entry of the details of the mortgage into the relevant register.

A legal mortgage transfers ownership of the asset to the mortgagee so it cannot be sold to a third party without the mortgage being released and ownership being transferred back to the mortgagor. Alternatively the purchaser can agree to acquire the property subject to the existing mortgage, which is unusual.

Equitable mortgage: An equitable mortgage only transfers a beneficial interest in the asset to the mortgagee, with full legal ownership remaining with the mortgagor. In general, an equitable mortgage will arise where one of the following applies:

• the formalities necessary to create a legal mortgage have not been complied with;
• the mortgagor's interest in the asset being mortgaged is an equitable interest;
• the parties have merely entered into an agreement to create a legal mortgage in the future over the asset in question, rather than formally creating such a mortgage;
• the property to be mortgaged is recognised only in equity - for example, an interest in a trust fund.

Equitable mortgages and charges can be taken in a number of ways, some of which offer very little protection against third parties obtaining an interest in the charged asset and can make enforcement over the charged asset very difficult. It is preferable to take a legal mortgage or charge wherever possible.

The term 'charge' is often used as a generic term for all types of security interest, but specifically it represents an agreement between a creditor and a debtor in which a particular asset or class of assets can be used to satisfy a debt. A charge creates an encumbrance or interest which attaches to the asset and travels with it into the hands of any third parties. The only exception to this is a genuine, arms-length purchaser of the full legal ownership for value and without notice, who will acquire the asset free of the charge.

A charge does not involve the transfer of ownership or possession of an asset. For practical reasons most lenders will not want to take possession of the borrower's assets and nor will the borrower want to lose control of them, especially if those assets are used in the day-to-day running of the business. Accordingly a lender (chargee) will instead want to take security by obtaining rights over specific assets of the borrower (chargor) as security for the loan. The chargee then has a right to resort to that asset to repay the debt.

Charges can either be fixed or floating. The nature of a charge (whether fixed or floating) is particularly important if the borrower becomes insolvent. Under a fixed charge an asset which is ascertained and definite, or capable of being ascertained and defined, can be used to satisfy a debt immediately or once the lender acquires an interest in it.

A floating charge, on the other hand, hangs over a class of assets or future assets and acts as a deferred right to use those assets to satisfy a debt. Until an event occurs which causes the floating charge to fix to those assets, the borrower is free to dispose of and add to the assets in the ordinary course of its business. When the event occurs and the floating charge becomes fixed, it attaches to the assets that make up that class at that point.

It should be noted that the label attached to the charge is not conclusive in determining whether it will be regarded by a court as fixed or floating. To be confident that a court will regard a charge over assets as fixed, the lender must demonstrate that it has exercised control over the charged assets to the extent that the charge does not 'float' over the assets but is fixed to them. In practice, this means implementing clear restrictions on the ability of the borrower to deal with the assets and enforcing those restrictions.

Fixed charges

Fixed charges attach immediately to the charged asset, providing that the asset is or is capable of being ascertained and definite. They can be granted by anyone including companies, limited liability partnerships (LLPs), traditional partnerships and individuals.

The key characteristic of a fixed charge is that it gives the lender control over the charged asset. This control is crucial to the nature of a fixed charge - without sufficient control, the charge will be deemed to be floating. Typically, a document which creates a fixed charge will give the lender the right to:

• prevent the borrower from disposing of, or otherwise dealing with, the asset without the lender's consent;
• sell the asset if the borrower defaults under the loan;
• require the borrower to maintain the value of the asset while it remains in the borrower's possession; and
• claim the proceeds of the sale of the charged asset in priority to other creditors.

The charge document should ensure that the charged assets are identified as precisely as possible.

Fixed charges have a number of important advantages over floating charges:

• a floating charge given by an insolvent company within the 12 months before the onset of insolvency (two years if the chargee is a 'connected person' with an interest in the chargor) is void except to the extent that the insolvent company has acquired new assets since the security was granted;
• a floating charge ranks behind the rights of preferential creditors if the company goes into administration, receivership or liquidation, while a fixed charge takes priority over all unsecured claims, preferential or otherwise;
• the sale of, or any encumbrance or burden created over, an asset which is subject to a floating charge will as a general rule take effect free from that charge, while a fixed charge can only be defeated if the asset is sold to a genuine, arm's length purchaser of the legal title of that asset for value without notice;
• many foreign legal systems, particularly civil law jurisdictions such as those in Europe, do not recognise floating charges;
• all floating charges given by a company need to be registered at Companies House, otherwise they cannot be forced against the liquidator, administrator or any creditor of the company. A fixed charge is only registrable if taken over a class of asset specifically listed in the Companies Act.

Floating charges

Floating charges, as the name suggests, hover above a shifting pool of assets. While fixed charges can be created by anyone, floating charges can only be created by companies, LLPs and, under the Agricultural Credits Act, farmers. Individuals cannot grant floating charges over their assets.

A floating charge has the following characteristics:

• it is a charge on a class of assets, present and future, of a company;
• that class is one which, in the ordinary course of the company's business, would change from time to time;
• it is understood that, until some future step is taken by or on behalf of the chargee, the company may carry on its day to day business as far as it concerns that particular class of assets.

Unlike assets secured by a fixed charge, the assets secured by a floating charge are described in very general terms – for example, the borrower's 'trading stock' or its 'undertaking and assets'. This group of assets may fluctuate from time to time either through the borrower disposing of them in its ordinary course of business or by it acquiring further assets in that class after the floating charge was created. This flexibility is the great advantage of a floating charge, but the freedom to deal with assets presents the lender with the problem of how to stop the borrower from disposing of all of those assets. For this reason, lenders prefer to take fixed charges over specific assets where possible. Lenders do have limited ability to control floating charge assets in some circumstances – a floating asset will fasten onto the charged assets which are in existence when a certain event occurs, either by operation of law or by agreement of the parties, which fixes the charge. At that point, the floating charge stops hovering over the pool of assets and instead becomes fixed to those assets which exist at that time.

Despite the inherent weaknesses of a floating charge, it is usually important for a lender to take a floating charge wherever possible. A floating charge has three important advantages:

• it allows the bank to take security without unduly restricting or affecting the borrower's ability to carry on its business, including the buying and selling of assets;
• providing the charge is a 'qualifying floating charge' for the purposes of the Insolvency Act, the holder will be able to appoint an administrator without applying to court for an order;
• it acts as a catch-all, sweeping up intangible assets which cannot be specifically charged or assets which the lender is unaware of.

Banks will usually get the best of both worlds by using a combination of fixed and floating charges in one document, known as a debenture. This document usually creates fixed charges over certain assets of the company – land, plant and machinery, goodwill, uncalled capital, intellectual property rights, book debts, non-trading account bank balances – and a floating charge over all the other assets. By using this combination a bank can obtain adequate security for its loan, safe in the knowledge that all the borrower's key assets apart from stock in trade are subject to fixed charges. At the same time the company is free to carry on its business in a relatively unhindered manner, and can sell its stock in trade in the ordinary course of business without having to obtain the bank's consent for every sale.

Assignment by way of security

A borrower's rights against third parties, such as the right to receive payment for debts on its own books, can be assigned to a third party as a way of selling those rights – this is an absolute, or direct, assignment. It is also possible to carry out an assignment by way of security over a borrower's choses in action – rights the borrower is entitled to under contracts – as security for that borrower's debts. As with any assignment, an assignment by way of security can be either legal or equitable. An assignment will be legal if it is:

• in writing and executed by the borrower (the assignor);
• absolute - that is, unconditional and for the whole amount; and
• notified in writing to the person against whom the assignor could enforce those assigned rights, usually the debtor of the borrower company.

As a result, a legal assignment should be expressed as an absolute assignment with a provision that those rights will be reassigned once the relevant debt is satisfied. If, however, an assignment is made 'by way of charge' rather than by way of security then it will take effect in equity only.

A legal assignment can only assign debts which already exist. Only an equitable assignment can assign rights under future contracts.

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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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Assignments: why you need to serve a notice of assignment

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

• If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
• If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
• Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips  from our Banking & Finance team.

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Security assignments - not always what they say they are?

The nature of security created under a security document does not always match its description in the document. Charlotte Drake explains how this recharacterisation risk can apply to security assignments. 

Is an "absolute" security assignment legal or equitable?

Legal assignments – key requirements

Lenders commonly take security over "choses in action" (such as debts or rights under contracts) by way of assignment. An assignment involves the transfer of either legal ownership (legal assignment) or equitable ownership (equitable assignment).

Section 136 of the Law of Property Act 1925 dictates the formalities for taking a legal assignment. It requires that a legal assignment must (among other things):

• be in writing;
• be executed by the assignor; 
• be "absolute";
• not be expressed to be "by way of charge" only; and
• be notified in writing to the person against whom the assignor could enforce the assigned rights (the third party).

Legal assignments by way of security

There has been much case law on what "absolute" means. An assignment will not be absolute if it is conditional, or of part of a debt. However, a security assignment can qualify (provided it is not "by way of charge"): the fact the assignor has an equity of redemption under a security assignment does not of itself prevent the assignment from being "absolute". Security assignments sometimes use the term "absolute" to make clear they are intended to be legal assignments. However, the terminology used is not decisive. An assignment will not be "absolute" unless the third party can then deal with the assignee alone in respect of the assigned rights. The assignee owes an obligation to the assignor to reassign the rights on discharge of the secured liability. But the third party can continue to deal with the assignee until it receives notice of that reassignment.

In practice, this usually presents a considerable stumbling block to taking security by way of a legal assignment. Security assignments often allow the assignor to continue to deal with the third party, which commercially suits assignor, assignee and third party alike. However, such an assignment will not be "absolute" and so will take effect in equity only, even if the security document claims to effect a legal assignment.

The recent case of  Ardila Investments NV v. ENRC NV  and another 1  highlighted this. The judge accepted that the assignment clause in the document used "the words of a legal assignment". However, he pointed to other clauses in the assignment document which suggested the parties had intended it to take effect in equity rather than law. One of these clauses obliged the assignor to "pursue its rights" under the assigned contracts, which is clearly inconsistent with an absolute assignment.

Legal or equitable – does it matter?

Often not. A notified equitable assignment has as strong a priority against other interests in the assigned rights as a legal assignment.

One advantage of a legal assignment is that a legal assignee can sue the third party without the assignor's involvement. Received wisdom used to be that an equitable assignee could not sue alone and the assignor (as owner of the legal interest) must be joined in as party to proceedings (either as co-plaintiff if willing, or as co-defendant if not).

In  Ardila  the judge held that the assignment took effect in equity and that both assignor and assignee should join in the proceedings as co-claimants. As it happened, when the hearing took place, the assignor had been joined as co-claimant anyway. In other cases, an equitable assignee has been able to sue the third party alone. As a purely practical matter, even if the assignor does need to be joined into proceedings this is unlikely to be more than an inconvenience.

Could a security assignment be "floating" security?

Could there be another, more unpalatable, result of control remaining with the assignor following a security assignment? In  Re Spectrum Plus 2  , the House of Lords of course held that a charge over a debt will be floating, not fixed, if the security holder fails to exercise control over the debt proceeds. Is a security assignment of a debt or similar contractual right also at risk of being recharacterised in this way? This is far from a settled point, but these obiter comments from Lord Scott in  Re Spectrum Plus  (at paragraph 107) suggest so: 

" Suppose, for example, a case where an express assignment of a specific debt by way of security were accompanied by a provision that reserved to the assignor the right, terminable by written notice from the assignee, to collect the debt and to use the proceeds for its (the assignor's) business purposes, ie, a right, terminable on notice, for the assignor to withdraw the proceeds of the debt from the security. This security would, in my opinion, be a floating security notwithstanding the express assignment. " 

There is some logic in this approach. If it were possible to "solve" Re Spectrum Plus by renaming all charges over debts as security assignments, the case would not have taken on the significance that it has. The risk of this type of recharacterisation is most obvious in a UK insolvency, where there is a clear distinction between the application of fixed and floating recoveries. In this context, at least, the "fixed/floating" distinction is likely to be more of a concern to a lender than whether its security assignment is "legal" rather than "equitable".

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Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Muhammad Yar L.

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

• Direct mailers
• Place newspaper ads
• Make posts in online forums
• Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

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Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.

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Bulletins | January 30, 2018

Assignment by way of security – beware of giving away more than you bargained for.

Construction

Assignment by way of security is a concept that comes up on many construction projects; typically as a condition of providing finance a funder will require an assignment by way of security of key construction documents, including building contracts and appointments, with the intention that if the borrower defaults on the loan, the assignment will be perfected and the funder will be entitled to enforce its rights under the constructions documents. How and when exactly such assignment takes place and the interplay with an employer’s rights under its contracts on a project was brought into focus in last year’s case of Mailbox (Birmingham) Limited v Galliford Try Construction Limited ([2017] EWHC 67 (TCC)).

Mailbox (Birmingham) Limited (“Mailbox”), the claimant special purpose vehicle set up to develop the Mailbox in Birmingham (“the Property”), a high-end mixed used development, boasting a Harvey Nichols and the base for BBC Birmingham, engaged Galliford Try Construction Limited (“Galliford”) for refurbishment works at the Property under a building contract dated 23 December 2013. A dispute arose between the parties regarding responsibility for delay, the final account, liquidated damages and Mailbox’s termination which was referred to adjudication, where Galliford were ordered to pay Mailbox £2,477,152.86 plus 75% of the adjudicator’s costs. Galliford did not pay the sums ordered, so Mailbox sought enforcement of the adjudicator’s decision in the High Court.

Did Mailbox have a right to bring an adjudication?

Galliford’s primary defence to the enforcement was that Mailbox had no right to bring the claim, as it had assigned the benefit of the building contract with Galliford to Aareal Bank AG Wiesbaden (“Aareal”) in accordance with the requirements of a debenture dated 10 May 2011. Mailbox raised three defences:

• The building contract was not in existence at the time of the assignment referred to in the debenture. Therefore there could be no assignment;
• Alternatively, any assignment was by way of charge rather than a legal assignment; or
• The contract had been re-assigned from Aareal to Mailbox before Mailbox commenced adjudication proceedings.

Mailbox failed on the first two defences, but won on the third so was able to enforce the adjudicator’s award. However, it was the analysis of the first and second defences and Mrs Justice O’Farrell’s review of the requirements for legal assignment under Section 138 of the Law of Property Act 1925 that are of particular note.

It was held that the wording of the debenture covered future contracts, including the building contract in question. The wording “each chargor with full title guarantee assigns absolutely by way of security in favour of the security trustee” amounted to a full legal assignment rather than an assignment by way of charge and/or a conditional assignment. Further, there was a requirement for notice of the assignment to be served and specific reference to rights being re-assigned, both of which were more akin to an absolute assignment. Express notice was given to Galliford, again consistent with an absolute assignment.  Thankfully for Mailbox, on the day it commenced the adjudication, Aareal had re-assigned the rights under the building contract to Mailbox. If it had not done so, or done so after the adjudication had been commenced, Mailbox would not have been entitled to commence the adjudication.

Practical Tips

When obtaining finance for a project it is crucial to understand what the funder really requires in relation to security over construction documents. If all rights are assigned, the employer no longer has the ability to enforce such rights and may have given away more than he bargained for.

It may be that the use of collateral warranties or third party rights together with a charge will suffice but if not (which is unfortunately still the common position), it is important that any such rights are re-assigned before the employer commences an adjudication or any other proceedings.

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Thread Options #1328106 - 01/21/10 05:08 PM Posts: 4 Operations Compliance #1328118 - 01/21/10 05:17 PM Kelly Knick Posts: 21,939 Preview View Profile Private Message Follow User Forum Posts Like Summary Marketplace Marketplace Morning Report Marketplace Tech Make Me Smart This is Uncomfortable The Uncertain Hour How We Survive Financially Inclined Million Bazillion Marketplace Minute® Corner Office from Marketplace Latest Stories Collections Smart Speaker Skills Corrections Ethics Policy Submissions Individuals Corporate Sponsorship Foundations What the Supreme Court’s SEC decision means for the administrative state Share Now on: https://www.marketplace.org/2024/06/27/what-the-supreme-courts-sec-decision-means-for-the-administrative-state/ COPY THE LINK HTML EMBED: Sign up for the Marketplace newsletter to get the day’s biggest business stories, our economic analysis, and explainers to help you live smarter, straight to your inbox every weekday evening. Thursday morning, the Supreme Court released its ruling on Securities and Exchange Commission v. Jarkesy , a case largely focused on federal agencies’ power to make and enforce policy. Blake Emerson , professor of law and political science at the University of California, Los Angeles, joined “Marketplace” host Kai Ryssdal to discuss the majority’s apparent antipathy toward agency powers as expressed in the decision. Below is an edited transcript of their conversation. Kai Ryssdal: First blush, what do you make of this decision? Blake Emerson: So this opinion is of a piece with a number of cases that the Supreme Court has recently laid down that significantly limit the powers of Congress to regulate the economy to promote public health and public safety, and this opinion on the Securities and Exchange Commission’s authority to impose penalties in its in-house courts furthers that overall project.  Ryssdal: This is not just about the Securities and Exchange Commission, though, that’s kind of the point. Emerson: Yes, very much so. So the powers that the court said the SEC unconstitutionally exercised are powers that other agencies also hold. So for instance, the Centers for Medicare & Medicaid Services has closely analogous powers, their power related to taxation very much like that. And if we look beyond the the narrow ruling of the case about penalties to this broader question about regulatory agencies’ powers to regulate what the court calls “private rights,” like rights to property and contract, there’s a much larger swath of agencies like the National Labor Relations Board and the Federal Trade Commission that could come under threat now that the court has made this significant change in law. Ryssdal: Am I going too far if I say that these regulatory agencies and the powers they exercise are how the economy works? Emerson: I think they’re certainly central to the way in which the economy has operated, at least since the New Deal. The theory of the administrative state in the United States is that we want to have a free market economy, but there are many cases where the market doesn’t function properly, or where there are values other than maximizing profit, that the people through Congress want to recognize so that the Securities and Exchange Commission, for instance, was created in response to the Great Depression in order to counter widespread fraud and abuse in the sale and marketing of securities. And this opinion takes away one of the tools, one of the key tools in the arsenal that these kinds of agencies have to limit those kinds of abuses. Ryssdal: Does it then follow that there may be more financial fraud and abuse if the Securities and Exchange Commission doesn’t have these powers? Emerson: Yes, well, in a very straightforward way, you can, you can think of this kind of ruling as increasing the costs to agencies like the SEC of enforcing law, and at the same time decreasing the cost for people who want to break the law doing so. Because this will make it harder for the SEC to enforce the various securities laws that Congress had given that responsibility to administer. Ryssdal: The phrase that comes to mind here, professor, is “chilling effect,” right?  Emerson: Absolutely. And that’s consistent with a number of other rulings that the Supreme Court has laid down, that send a very strong signal both to other courts, to lower courts in the federal judiciary, as well as to Congress and to administrative agencies, that they are under very close scrutiny by the Supreme Court, and the court will look skeptically at their exercise of significant powers. Ryssdal: Well, so let’s play this forward a little bit, because either tomorrow or Monday now, I understand, are going to be more decision days. And we’ve still got a case coming about the Chevron deference, about whether we ought to defer to regulatory agencies in interpretation of law. What does today’s decision and the body of work that you’ve just cited lead you to believe about what might happen with the understanding that trying to spitball what the court is going to do is a fool’s errand? Emerson: That’s right. It’s always hard to make predictions, but I think it is very likely that the court will either overrule or significantly limit what’s called Chevron deference. And Chevron deference is a principle going back to the 1980s. But it’s also more deeply rooted in American administrative law, that when a statute is unclear, when it could mean more than one thing, the courts are supposed to accept the executive agency’s interpretation of the statute if it’s reasonable. And the theory of this rule is that agencies both have scientific and technical expertise that the courts lack, and they’re also more democratically accountable than the courts because the president exercises a lot of control over the people who are in charge of agencies. So it is fair to say this has been a bedrock principle of administrative law going back many decades. And it is, it is a doctrine that many on the court, including, for example, Justice [Neil] Gorsuch, have expressed a lot of skepticism about because they worry that this doctrine takes away power that constitutionally belongs to the courts, the power to interpret law, and that in so doing it threatens liberty, the liberty of citizens. Now proponents of Chevron deference will tell you that given that these are the questions that regulatory agencies like the Environmental Protection Agency, or like the Food and Drug Administration or the National Labor Relations Board, the questions that these agencies answer and address in their policymaking are often very technical and politically sensitive. The courts just don’t have the right tools to answer those questions. And moreover, there are often very significant public interest or even public rights that are at issue in programs to protect the public health and safety. But the court, the court has given, I’d say, a lot of notice that Chevron is on the chopping block. And so I expect to see that doctrine either overruled or severely limited. Ryssdal: Do you ever sit back — here comes the free response question. Do you ever sit back as a guy whose job it is to figure out administrative law and and teach it to new lawyers, do you ever sit back and wonder how the administrative state and how this economy runs became so vilified? Emerson: Yeah, it’s a good, it’s a good question. I think what has happened over the course of the past 40 years or so, is that we have really profound not only legal, but also political disagreements about the proper role of the federal government in regulating the economy, in trying to, to prevent unfair practices and trying to avoid harmful pollution, things of that nature. And unfortunately, that has broken down along partisan lines, where you have one, the Republican Party tends to be opposed to such measures and the Democrats are broadly in favor of it. And whenever, whenever you have that kind of partisan split in law, it tends to be damaging to the fabric of the legal system because it becomes a political football. And so depending on which justices are nominated to the court and who is the president, you end up getting these really wild shifts in policy. Another side to it that I would, I would note is that Congress has not shown a lot of willingness or alacrity to get in the game and to write new statutes, to refine the powers of agencies to respond to legitimate concerns that sometimes agencies, you know, exercise inappropriate, broad powers without adequate consultation. And so in the absence of that kind of legislative action, what we see increasingly is more and more unilateral presidential action. And that’s something that the courts, understandably, sometimes look on with worry and with skepticism. And so today, we’re seeing, we’re seeing the culmination of that process in what Justice [Elena] Kagan has called, in another opinion, an existential threat to the administrative state. Stories You Might Like Thursday’s Supreme Court decision was about a lot more than climate change Why you should care about a Supreme Court decision on the “administrative state” Supreme Court session opens with a challenge to federal regulators’ powers Supreme Court limits FTC’s ability to make fraudsters reimburse consumers How broadly will a Supreme Court ruling on LGBTQ rights and religious freedom apply? The economic impact of SCOTUS upholding the Indian Child Welfare Act There’s a lot happening in the world.  Through it all, Marketplace is here for you.   You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.   Your donation today powers the independent journalism that you rely on . 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If a currency, commodity or security—or even a rare pair of sneakers—is priced differently in two separate markets, traders buy the cheaper version and then sell it at the higher price to make money. Understanding How Arbitrage Works Arbitrage is an investing strategy in which people aim to profit from varying prices for the same asset in different markets. Quick-thinking traders have always taken advantage of arbitrage opportunities in markets. Today, financial professionals use sophisticated algorithms to discover and exploit complicated arbitrage strategies. Often the price discrepancies that are at the heart of arbitrage involve multiple geographies, like you see in the foreign exchange market . They also occur when there is a lag in information, as can be the case with stocks trading on different exchanges or in cryptocurrency arbitrage. 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Thirteen U.S. service members  died  in an attack at the Kabul airport in Afghanistan in August 2021. Three soldiers were  killed  in an attack in Jordan in January of this year. By Layla Ferris Trump claims he did not refer to U.S. soldiers who were killed as "suckers and losers": False Trump: "First of all, that was a made-up quote. 'Suckers and losers,' they made it up." Details : Current and former U.S. military service members have detailed to CBS News multiple instances when Trump made disparaging remarks about members of the U.S. military who were captured or killed, including referring to the American war dead at the Aisle-Marne American Cemetery in France in 2018 as "losers" and "suckers."   A senior Defense Department official and a former U.S. Marine Corps officer with direct knowledge of what was said detailed how Trump said he did not want to visit the cemetery because it was "filled with losers." These accounts were backed independently by two other officials — a former senior U.S. Army officer and a separate, former senior U.S. Marine Corps officer.    In another conversation on the trip, Trump referred to the 1,800 Marines who died in the World War I battle of Belleau Wood as "suckers" for getting killed.  The Atlantic was first to report Trump's comments in 2020. His former chief of staff John Kelly later confirmed to CNN the essence of what Trump had said. By James LaPorta and Sierra Sanders  Biden claims 40% fewer people are crossing border illegally, better than when Trump was in office: Partially true          Biden: "I've changed it in a way that now you're in a situation where there 40% fewer people coming across the border illegally; it's better than when he left office." Details : Since Mr. Biden issued a  proclamation  banning most migrants from asylum at the U.S.-Mexico border in early June, illegal crossings there have dropped. In the past week, daily illegal border crossings have averaged roughly 2,000, according to internal Department of Homeland Security data obtained by CBS News. That's a 47% drop from the 3,800  daily average  in May. During the height of a spike in migration faced by the Trump administration in 2019, Border Patrol recorded an average of 4,300 daily illegal crossings,  government data  show. But there were months during the  Covid-19 pandemic  when the Trump administration averaged fewer than 2,000 illegal border crossings. By Camilo Montoya-Galvez Trump claims migrants coming to U.S. and "killing our citizens at a level...we've never seen before": Misleading Trump: "People are coming in and killing our citizens at a level like we've never seen before."  Details :  Some migrants who are believed to have entered the U.S. along the southern border in recent years have been charged with murder and other heinous crimes in different parts of the country. They include the suspect in the high-profile murder of Georgia nursing student Laken Riley . But while the data on this question is not comprehensive, available  studies  have found that migrants living in the country illegally do not commit crimes at a higher rate than native-born Americans.  Government  statistics  also show a very small fraction of migrants processed by Border Patrol have criminal records in the U.S. or other countries that share information with American officials. On COVID, Trump claims more people died under Biden administration than his: True, but needs context   Trump: "Remember, more people died under his administration — even though we had largely fixed it — more people died under his administration than our administration, and we were right in the middle of it, something which a lot of people don't like to talk about. But [Biden] had far more people dying in his administration." Details : More than 460,000 people had died from COVID-19 by the end of the week that Biden was inaugurated in 2021, while more than 725,000 have died in the three years since then, according to data from the  CDC . However, research has found that the counts of COVID-19 deaths, especially in the early days of the pandemic, were likely  undercounted . By Julia Ingram and Jui Sarwate In discussing abortion, Trump claims former Virginia governor, a Democrat, supported killing babies: False Trump: "If you look at the former governor of Virginia, he was willing to do this — he said  'we'll put the baby aside and we'll determine what we'll do with the baby'.. .meaning we'll kill the baby." Details : In a 2019 radio interview then-governor of Virginia Ralph Northam, in discussing late-term abortions,  addressed a hypothetical scenario in which a fetus was severely deformed or wasn't otherwise viable. He said, "the infant would be delivered, the infant would be kept comfortable, the infant would be resuscitated if that's what the mother and the family desired."  Northam did not say the fetus should be killed. Killing a newborn baby — or infanticide — is illegal in every state, and not a single state is trying to change that.  By Laura Doan and Daniel Klaidman Trump claims Biden "went after" his political opponent in New York "hush money" case to damage him: False         Trump: "[Biden] basically went after his political opponent (Trump) because he thought it was going to damage me, but when the public found out about these cases, 'cause they understand it better than he does, he has no idea what these cases are, but when they found out about these cases, you know what they did? My poll numbers went up, way up." Details : There is no federal jurisdiction over a state case. The Manhattan district attorney's office is a  separate entity  from the U.S. Department of Justice. The department does not supervise the work of the Manhattan D.A.'s office, does not approve its charging decisions, and it does not try the D.A.'s cases. By Pete Villasmil Trump claims he brought insulin prices down for seniors: Misleading Trump: "I'm the one that got the insulin down for the seniors. I took care of the seniors." Details :  During Trump's time as president, Medicare created a voluntary program  in 2020  between some plans and insulin manufacturers that agreed to cap out-of-pocket costs for insulin at $35 per month. Around  half of  Medicare Advantage or stand-alone prescription drug plans ended up participating by 2021.  David Ricks, CEO of insulin drugmaker Eli Lilly, has taken credit for pioneering the idea with Trump administration officials at a congressional  hearing  and in an  interview . In the same interview with STAT, Seema Verma, former Medicare agency chief in the Trump administration, gave Ricks the credit for the cap: "He is an unsung hero. He was actually the mastermind of all of this."  Medicare  ended  the policy in 2023, after Mr. Biden signed into law the  Inflation Reduction Act , which capped insulin costs for Medicare beneficiaries — not just for the portion of plans participating in the program. The law capped insulin costs at the same amount of $35 per month. By Alexander Tin and Hunter Woodall  Trump claims Biden wants open borders: False Trump: "He wants open borders. He wants our country to either be destroyed or he wants to pick up those people as voters."  Details : When he took office, Mr. Biden reversed numerous Trump-era immigration policies, including a program that required migrants to await their asylum hearings in Mexico. U.S. Border Patrol has also reported record numbers of migrant apprehensions along the southern border during Mr. Biden's presidency. But Mr. Biden has never endorsed or implemented an "open borders" policy. In fact, Mr. Biden has embraced some restrictive border policies that mirror rules enacted by his predecessor. In 2023, his administration published a regulation that disqualified migrants from asylum if they crossed into the country illegally after not seeking protection in a third country.  Earlier this month, Mr. Biden enacted an even stricter policy: a proclamation that has partially shut down asylum processing along the border. His administration has also carried out over 4 million deportations, expulsions and returns of migrants since 2021, according to  government data . Only U.S. citizens can vote in federal elections. Most who cross into the U.S. illegally are not on a path to permanent legal status, let alone citizenship. Even those who apply and win asylum — a process that typically takes years to complete — have to wait five years as permanent U.S. residents before applying for American citizenship. There's no evidence to suggest that the Biden administration's border policy is based on a desire to convert migrants into voters. Biden claims Trump wants to get rid of Social Security: False         Biden "[Trump] wants to get rid of Social Security. He thinks there's plenty to cut in social security. He's wanted to cut Social Security and Medicare, both times." Details : Trump has repeatedly  said  he will try to protect Medicare and Social Security. Trump said in a March 21 Truth Social  post  that he would not "under any circumstance" allow Social Security to "be even touched" if he were president. Trump had said in a CNBC  interview  on March 11 that "there is a lot you can do" in terms of "cutting" spending under Social Security. Mr. Biden  said  the comments were proof Trump aimed to make cuts in the programs, but a Trump campaign spokesman  said  Trump was referring to "cutting waste and fraud," not Social Security entitlements. Trump claims Biden has the "largest deficit" in history of U.S.: False Trump: "But he's (Biden) got the largest deficit in the history of our country." Details : The national deficit was the largest it had been in over two decades under Trump's administration, not Mr. Biden's, according to  data from the U.S. Treasury . The deficit peaked in fiscal year 2020 at $3.13 trillion, and declined to $1.7 trillion by the end of fiscal year 2023. By Julia Ingram Presidential Debate Donald Trump Arden Farhi is the senior White House producer at CBS News. He has covered several presidential campaigns and the Obama, Trump and Biden administrations. He also produces "The Takeout with Major Garrett." More from CBS News How to watch the first presidential debate between Biden and Trump Biden struggles early in presidential debate with hoarse voice When the next presidential debate of 2024 takes place Biden campaign, DNC highlight democracy, Jan. 6 in lead-up to debate We've detected unusual activity from your computer network To continue, please click the box below to let us know you're not a robot. Why did this happen? Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy . For inquiries related to this message please contact our support team and provide the reference ID below. EU and Zelenskiy expected to sign Ukraine security pact Medium Text Sign up here. Reporting by Andrew Gray, Editing by Timothy Heritage Our Standards: The Thomson Reuters Trust Principles. New Tab , opens new tab World Chevron Biden acknowledges age, bad debate performance but vows to defeat Trump President Joe Biden said on Friday he intended to defeat Republican rival Donald Trump in the November presidential election, giving no sign that he would consider dropping out of the race after a feeble debate performance that dismayed his fellow Democrats. 266 IMAGES Les Form Si-32 Form Si-32 Fillable Form Ft 459 [emergent_ex10z13001.jpg] Oregon Assignment of Securities Oregon Assignment of Securities VIDEO Assignment (law) Book Closure Laws MODES OF CREATING CHARGES ON SECURITIES Securities industry What Does It Mean When The Fed Raises Rates? Lesson 1.3 COMMENTS Trading Options: Understanding Assignment An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security. To ensure fairness in the distribution of American ... Assignment: Definition in Finance, How It Works, and Examples Assignment: An assignment is the transfer of an individual's rights or property to another person or business. For example, when an option contract is assigned, an option writer has an obligation ... To assign or not to assign that's a real question A sum becoming due under an existing contract is regarded in law as an existing asset, even though the right to payment has not yet matured. Under the Law of Property Act 1925 ("LPA"), a legal assignment must: ‒ be in writing; ‒ be absolute and, in the case of a debt, of the whole (and not part only) of the amount owed; 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 ... Assign: What It Means, How It Works, Example Assign: The act of clearing houses and brokerage s selecting short option and future contract holders to deliver underlying securities or commodities of maturing or exercised/tendered contracts. Security in finance transactions Assignment by way of security. A borrower's rights against third parties, such as the right to receive payment for debts on its own books, can be assigned to a third party as a way of selling those rights - this is an absolute, or direct, assignment. It is also possible to carry out an assignment by way of security over a borrower's choses in ... Assignments by way of security Assignments by way of security are a type of mortgage. They involve: •. an assignment (ie transfer) of rights by the assignor to the assignee. subject to: •. an obligation to reassign those rights back to the assignor upon the discharge of the obligations which have been secured. When the obligations that have been secured have been discharged, Understanding the Assignment of Mortgages: What You Need To Know 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 ... Assignment of Lease: Definition & How They Work (2023) The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor's place in the landlord-tenant relationship. You can view an example of a lease assignment here . Assignments: why you need to serve a notice of assignment Why should we serve a notice of assignment? The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty. Collateral Assignment: All You Need to Know Jump to Section. A collateral assignment involves granting a security interest in the asset or property to a lender. It is a lawful arrangement where the borrower promises an asset or property to the lender to guarantee the debt repayment or meet a financial obligation. Moreover, in a collateral assignment, the borrower maintains asset ... Security assignments Security assignments sometimes use the term "absolute" to make clear they are intended to be legal assignments. However, the terminology used is not decisive. An assignment will not be "absolute ... Assignment of Contract: What Is It? How It Works An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the ... SEC.gov Security Power. A "security power," often called a stock power or bond power, is a legal document - separate from a securities certificate - that investors can use to transfer or assign ownership to another person. Securities powers typically are used either: (1) as a matter of convenience when an owner cannot sign the actual certificates ... Assignment of Accounts Receivable: Meaning, Considerations Assignment of accounts receivable is a lending agreement, often long term , between a borrowing company and a lending institution whereby the borrower assigns specific customer accounts that owe ... Assignment by way of security Background. Assignment by way of security is a concept that comes up on many construction projects; typically as a condition of providing finance a funder will require an assignment by way of security of key construction documents, including building contracts and appointments, with the intention that if the borrower defaults on the loan, the assignment will be perfected and the funder will be ... What is an assignment by way of security? This document is from Thomson Reuters Practical Law, the legal know-how that goes beyond primary law and traditional legal research to give lawyers a better starting point. We provide standard documents, checklists, legal updates, how-to guides, and more. 650+ full-time experienced lawyer editors globally create and maintain timely, reliable ... Georgia Assignment of Security Deed Forms The Current holder of the Security Deed uses an "Assignment of Security Deed" to transfer the instrument to another party. This is typically done when the Security Deed has been sold, this allows the new lender to collect payments on the debt. Georgia Statute: 44-14-64. (g) A transfer of a deed to secure debt shall not be recorded unless it ... Assignment (by way of security) Definition What does Assignment (by way of security) mean? An assignment by way of security is a type of mortgage . It involves an assignment (ie transfer) of rights by the assignor to the assignee subject to an obligation to reassign those rights back to the assignor upon the discharge of the obligations which have been secured. Form of Assignment of Stock As security therefore, Assignee has executed and delivered to Assignor a Stock Pledge Agreement, the form of which is attached hereto as Exhibit B. 4. General Provisions. (a) Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and the transactions contemplated herein ... Security Assignment Definition: 128 Samples Security Assignment means the Assignment of Sublease (Trust No. 118-A) dated as of July 10, 1995 between Lessor, as assignor, and Head Lessor, as assignee. Sample 1. Based on 4 documents. Security Assignment means a first assignment of the Borrower 's rights in respect of Insurances and all benefits thereof (including the right to receive ... What are Assignment of Savings Accounts? The general meaning of the term is to simply pledge the account as collateral for a loan. A Google search suggested that some states may use the term in pledging funds to the state. So it may have a very specific, well defined meaning in a particular state...I do not know. Regardless, do not open an account where the customer thinks he or she ... PDF Supreme Court of The United States §201.1100). Such a penalty by definition does not "restore the status quo" and can make no pretense of being equita-ble. Tull, 481 U. S., at 422. In sum, the civil penalties in this case are designed to punish and deter, not to compensate. They are therefore "a type of remedy at common law that could only be enforced in courts of law ... What the Supreme Court's SEC ruling means for federal agencies Thursday morning, the Supreme Court released its ruling on Securities and Exchange Commission v.Jarkesy, a case largely focused on federal agencies' power to make and enforce policy.. Blake ... What Is Arbitrage? How Does It Work? Arbitrage means taking advantage of price differences across markets to make a buck. If a currency, commodity or security—or even a rare pair of sneakers—is priced differently in two separate ... Issue: Definition, Purposes, Types of Securities Offerings Issue is the process of offering securities as an attempt to raise funds. Companies may issue bonds or shares to investors as a method of financing the business. The term "issue" also refers to a ... Trump and Biden's first presidential debate of 2024, fact checked Trump claims he did not refer to U.S. soldiers who were killed as "suckers and losers": False. Trump: "First of all, that was a made-up quote. 'Suckers and losers,' they made it up." Supreme Court strikes serious blow against the administrative state In a potentially groundbreaking decision, the Supreme Court on Thursday ruled that defendants accused of fraud by the Securities and Exchange Commission have the right to a jury trial.. Why it matters: The decision in SEC v.Jarkesy deals a serious blow to the administrative state, part of a yearslong project by the financial sector and conservatives to weaken federal power. How a Cyberattack Took 15,000 Car Dealers Offline Roughly 15,000 car dealerships across the US and Canada have gone days without software systems crucial to running their business, following multiple cyberattacks on CDK Global. The company is one ... EU and Zelenskiy expected to sign Ukraine security pact The agreement will lay out the EU's commitment to help Ukraine in nine areas of security and defence policy - including arms deliveries, military training, defence industry cooperation and ... essay homework paper phd project resume review study thesis