What type of rent assignment allows the mortgagor to receive rents that automatically transfer to the mortgagee upon a negative event?

The correct type of rent assignment that allows the mortgagor to receive rents while also providing for automatic transfer of those rents to the mortgagee upon a negative event is referred to as a Soft Lockbox. In this arrangement, the mortgagor continues to collect rent payments from tenants, fostering ongoing cash flow for the property. However, if a default occurs, or another specified negative event takes place, control of the rent payments automatically shifts to the mortgagee. This setup provides a level of security for the lender while still allowing the borrower to manage cash flow until such an event occurs.

In contrast, other options like Hard Lockbox and Absolute Assignment typically involve a more immediate transfer of control over the rental income. A Hard Lockbox would result in rental payments going directly to a lockbox controlled by the lender from the outset, eliminating any interim collection by the mortgagor. Meanwhile, Absolute Assignment generally refers to a full and immediate transfer of rights and interest in the rent, without the soft management aspect that a Soft Lockbox allows. Options such as Usual Rent Assignment do not specifically provide the mechanism for an automatic transfer based on negative events, further differentiating them from the Soft Lockbox arrangement.