When you take out a mortgage, you pledge your home as collateral for a loan. If you default during your home loan's repayment period, the lender can foreclose the property, sell it, and use the proceeds to pay off your debt. Once you pay your home off, the lender no longer has a financial interest in the property. You're bank will sign a mortgage satisfaction document and file it with the public record's office — this proves that you own the property free and clear. In some states, trust deeds, not mortgages, are the predominant form of pledging property. Trust deeds also require a lien release.
Order the Payoff Statement
Contact your lender and submit any necessary document, such as a payoff request, to get the exact amount you owe. A mortgage lien can't be released until you have zeroed out the account. The balance on your monthly loan statement is not the payoff amount. Your lender must provide a payoff statement that accurately reflects amounts owed through a specified date, including the daily interest, or per diem, due through the payoff date. Your payoff statement may also include unpaid fees and a prepayment penalty if paying the home off early.
The Bank Files a Mortgage Satisfaction Form
The name of the document that needs to be filed or recorded in the public records office varies by state. It may be known by any of the following names: Certificate of Satisfaction, Satisfaction of Mortgage, Mortgage Cancellation, Cancellation of Deed of Trust, Reconveyance, Deed of Reconveyance, Discharge of Mortgage, Release of Lien or Release of Mortgage. Whatever the name is, all these document prove that you have paid off your mortgage loan in full. Some states such as Maryland, allow you to record the promissory note — the official IOU — marked "paid" or "cancelled" by your lender.
Find Out If the Lien Has Been Released
Your Secretary of State's office, your county recorder or your tax assessor's office maintains land records which show the liens recorded against your home's title. These government offices can let you know whether your lender has filed a release of lien after you pay off your home loan. If a title search indicates that the mortgage lien hasn't been released, your lender may not have yet filed, doesn't intend to file because you still owe money, or it will not file the lien release on your behalf – you must do it.
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Contact the Lender For Lien Release
Your lender should send you a copy of the lien release document within 30 days of loan payoff. In some states, lenders may have up to 90 days to send it. Most states have enacted time-frame laws for lenders. However, a lender may take longer. If the lender does not send the lien release document within the set time frame and you have followed all terms of the mortgage payoff statement, you may need to contact the lender and consult an attorney to help you get it. You may be entitled to receive statutory penalties for the delay.
File the Form
States and counties set the recording fees and procedures for filing a mortgage lien release form. Typically, you'll take the original documents to the recorder's office and file the release in person. There's usually a nominal fee similar to mortgage recording fees. Recorders may charge on a per-page basis. Your recorder may also temporarily keep the document, but must mail it back to you within a specified amount of time when the filing is complete.