How is a Mortgage Released When the Loan is Assigned to a New Bank?
Full Question:
Answer:
It is possible that the release of lien you received may be recorded at the county land recorder's office in order to remove the lien, and that a release in the name of the original bank will be effective. If you are in doubt, I suggest consulting a local attorney who can review all the facts and documents involved. You might also check with the county reorder's office to inquire if the bank's name on the recorded lien was ever changed. A person may be removed from a mortgage by payment in full of the mortgage (satisfaction), assumption of the mortgage payments by another person and release of the original mortgagor, release of you from the mortgage by the mortgage company and possibly other methods. A release of one mortgagor before the debt is fully paid is not commonly done by mortgage holders, but is done under certain circumstances.
Once a mortgage or deed of trust is paid, the holder of the mortgage is required to satisfy the mortgage or deed of trust of record to show that the mortgage or deed of trust is no longer a lien on the property. The general rule is that the satisfaction must be in proper written format and recorded to provide notice of the satisfaction. If the lender fails to record a satisfaction within set time limits, a title company may issue an affidavit as described below.
Please see the following TX statute:
§ 12.017 PROP. Title Insurance Company Affidavit as Release of Lien;
Civil Penalty
(a) In this section:
(1) "Mortgage" means a deed of trust or other contract lien on an
interest in real property.
(2) "Mortgagee" means:
(A) the grantee of a mortgage;
(B) if a mortgage has been assigned of record, the last person to
whom the mortgage has been assigned of record; or
(C) if a mortgage is serviced by a mortgage servicer, the mortgage
servicer.
(3) "Mortgage servicer" means the last person to whom a mortgagor has
been instructed by a mortgagee to send payments for the loan secured by a
mortgage. A person transmitting a payoff statement is considered the
mortgage servicer for the mortgage described in the payoff statement.
(4) "Mortgagor" means the grantor of a mortgage.
(5) "Payoff statement" means a statement of the amount of:
(A) the unpaid balance of a loan secured by a mortgage, including
principal, interest, and other charges properly assessed under the loan
documentation of the mortgage; and
(B) interest on a per diem basis for the unpaid balance.
(6) "Title insurance company" means a corporation or other business
entity authorized and licensed to transact the business of insuring
titles to interests in real property in this state.
(b) This section applies only to a mortgage on property consisting
exclusively of a one-to-four-family residence, including a residential
unit in a condominium regime.
(c) If a mortgagee fails to execute and deliver a release of mortgage
to the mortgagor or the mortgagor's designated agent within 60 days after
the date of receipt of payment of the mortgage by the mortgagee in
accordance with a payoff statement furnished by the mortgagee or its
mortgage servicer, an authorized officer of a title insurance company
may, on behalf of the mortgagor or a transferee of the mortgagor who
acquired title to the property described in the mortgage, execute an
affidavit that complies with the requirements of this section and record
the affidavit in the real property records of each county in which the
mortgage was recorded.
(d) An affidavit executed under this section must state that:
(1) the affiant is an authorized officer of a title insurance
company;
(2) the affidavit is made on behalf of the mortgagor or a transferee
of the mortgagor who acquired title to the property described in the
mortgage;
(3) the mortgagee provided a payoff statement with respect to
the loan secured by the mortgage;
(4) the affiant has ascertained that the mortgagee has received
payment of the loan secured by the mortgage in accordance with the payoff
statement, as evidenced by:
(A) a bank check, certified check, escrow account check from the
title company or title insurance agent, or attorney trust account check
that has been negotiated by the mortgagee; or
(B) another documentary evidence of the receipt of payment
by the mortgagee;
(5) more than 60 days have elapsed since the date payment was
received by the mortgagee;
(6) the title insurance company or its agent has given the mortgagee
at least 15 days' notice in writing of its intention to execute and
record an affidavit in accordance with this section, with a copy of the
proposed affidavit attached to the written notice; and
(7) the mortgagee has not responded in writing to the notification,
or a request for additional payment made by the mortgagee has been
complied with at least 15 days before the date of the affidavit.
(e) The affidavit must include the names of the mortgagor and the
mortgagee, the date of the mortgage, and the volume and page or clerk's
file number of the real property records where the mortgage is recorded,
together with similar information for a recorded assignment of the
mortgage.
(f) The affiant must attach to the affidavit a photostatic copy,
certified as a true copy of the original document, of:
(1) the documentary evidence that payment has been received by the
mortgagee, including the mortgagee's endorsement of a negotiated check if
paid by check; and
(2) the payoff statement.
(g) An affidavit that is executed and recorded as provided by this
section operates as a release of the mortgage described in the
affidavit.
(h) The county clerk shall index the affidavit in the names of the
original mortgagee and the last assignee of the mortgage appearing of
record as the grantors and in the name of the mortgagor as grantee.
(i) A person who knowingly causes an affidavit with false information
to be executed and recorded under this section is liable for the
penalties for filing a false affidavit, including the penalties for
commission of offenses under Section 37.02 of the Penal Code, and
to a party injured by the affidavit for actual damages or $5,000,
whichever is greater. The attorney general may sue to collect the
penalty. If the attorney general or an injured party bringing suit
substantially prevails in an action under this subsection, the court may
award reasonable attorney's fees and court costs to the prevailing
party.
