Even though you’ve paid off a mortgage or home equity line, the bank’s lien against your home may still remain.
During the course of a real estate transaction, whether a sale or refinance, a report of title is procured from a title insurance company to insure your buyer or lender that there are no liens against your property. Very often, such a report reveals the existence of an old lien, of which the owner is completely unaware. “I paid off that mortgage in 1983! Tell them it’s not on there anymore!”
We hear this all the time. The problem is that even though there may be no sums due under the promissory note, your home is not released from the lien until the lender files a Satisfaction of Mortgage with the County Clerk, and the lien will remain until that is done. “So we’ll just get it cancelled, that’s all” is the usual response. It’s not that easy.
In real estate things happen fast, and often the report of title isn’t delivered until a week or two before the expected closing. If the report shows an old mortgage that must be cleared, it will likely take several weeks- if not many weeks- to resolve, because it’s not always a function of just calling the lender. Requests of this sort need to be forwarded to a special department of the bank in writing, with all kinds of proof, before the lender will investigate. This “Mortgage Satisfaction” department will not take phone calls, so you can’t call for progress, and turnaround time is often 7-10 business days in the best of circumstances. And after the research is done, the bank will need to issue a satisfaction document and get it to us- a fax will usually be unacceptable. That takes more time.
If your lender is no longer in business (Fleet, Washington Mutual, Chemical Bank, Shadow Lawn Savings, to name a few) the process is more arduous. Before we can ask for a satisfaction, we need to find out which lender now owns the assets of that closed institution before research can begin- and that often requires more than one stop. The assets of some older banks have been sold three, four times (World Savings was sold to Wachovia, which was sold to Wells Fargo) and we need to track ownership of these assets, one by one. All of this additional work can involve additional attorneys fees, and more importantly, delay your closing.
Therefore, when you pay off a mortgage or home equity line, be sure that the lender files a Satisfaction of Mortgage, and demand a recorded copy. If they won’t provide that, call us for assistance and direction. If the lender does send cancellation documents to you, be sure to read them carefully – some lenders record the satisfaction directly- others will send you the original satisfaction documents that you need to send to the County Clerk for recording.
If you are thinking about selling or refinancing your home, consider having us check title beforehand to insure that no old liens remain outstanding.
These extra steps will save you time and money when you decide to sell or refinance your home.