Ask the Expert: What went wrong with my Mortgage Discharge

By
Managing Real Estate Broker with Alpine Lakes Real Estate Inc., NHRE# 02863
https://activerain.com/droplet/59cy

Ask the Expert: the dreaded “title issue” comes up just before a closing.

 

A Title defect can take many forms, for this entry we will focus on an improper discharge. When a mortgage is paid off, the lender issues a discharge which then has to be put on record to let the world know the loan on that particular property has been satisfied and no further payments are being sought. Sounds easy and it should be…what could go wrong you ask?

 

1) The discharge is not recorded in the county the property resides in

2) The discharge goes to the mortgagor after payoff but never is recorded

3) The lender (bank) is purchased, is then folded in to a new bank and when they receive the payoff balance of the loan they issue an improper discharge.

 

Lets talk more about case #3… big banks are gobbling up smaller banks as of late and one of the casualties is an improper discharge that is recorded at the registry of deeds. How does that happen? The next buyer / owner hires a title company (or real estate attorney) and the research of the back title history shows bank “A” gave a loan to a prior owner, but the discharge of the loan was given by bank “B”. Oops!! The title company has to see a clean title history to be able to certify there are no liens or encumbrances on the property, which enables them to issue a new title insurance policy to the lender and an owner’s policy to the buyer (if they wish to purchase added coverage above the lenders required coverage).

 

In case three Lender “A” made the loan, and then should have recorded a loan assignment to bank “B” that took them over. Then when bank “B” issues a discharge you could see they had the right to release the loan, as it was theirs to do so.

 

I implore you to hire a good Realtor to help you through the process of purchasing real estate, and have a title company examine the records well in advance of the closing to assure a clear title – or- to give them adequate time to remedy issues that can come up with a properties title.

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                                                                                                                                                                              Your-White Mountain New Hampshire real Estate Expert

                    steve@alpinelakes.com toll free 800-926-5653 /cell 603-381-7898

                        MLS search and Realtor web site: www.alpinelakes.com

                         My outside Blog: www.steveswhitemountainblog.com

                    Lincoln NH &  Local interest site: www.localism.com/nh/lincoln

    Grafton County NH MLS search

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Rainmaker
3,622,367
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

I had a simalar issue with my mom and myself.  Got lucky and resolved it quickly

Jan 10, 2018 11:23 AM #1
Ambassador
1,703,143
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

It is so important Steve Loynd  to have title ordered in a timely fashion . As you have so clearly pointed out a title company or bank may have not removed a lien that should have been removed . If this is the case adequate time is needed to clear title -- time is of the essence

Jan 10, 2018 02:13 PM #2
Rainmaker
1,038,210
Steve Loynd
Alpine Lakes Real Estate Inc., - Lincoln, NH
800-926-5653, White Mountains NH

Hannah... I'm afraid many title services do the research just before the closing to have the most up to date picture of the property records. But then when they find an issue it effects the closing , the lender and worst of all - it effects all the move in / move out preparation that buyers and sellers have been counting on.

Jan 11, 2018 06:18 AM #3
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Rainmaker
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Steve Loynd

800-926-5653, White Mountains NH
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