A mortgage lien is a legal claim against a property that must be satisfied when the property is sold. It provides notice that the lender has a secured interest in the property and guarantees that the property cannot be sold or transferred without either the loan being repaid or assumed. When a mortgage loan is paid off, a release of mortgage lien is issued to indicate that the lien has been satisfied and the property is free and clear of the lender’s claim.
Key Facts
- Purpose: A release of mortgage lien is issued to provide notice that the prior lien on a property has been paid in full and is released.
- Recording: The release of mortgage lien is recorded in the Land Records office to make it official and provide public notice of the lien release.
- Refinancing: In the case of a refinance, the title company typically handles the lien release process by paying off the existing mortgage and obtaining the necessary documentation for the release.
- Required Documents: The specific documents required for obtaining a lien release may vary depending on the type of loan. For a home, building, or land, the required documents may include recorded mortgage or deed of trust, recorded assignments, title search or commitment, and proof of payment.
- FDIC Assistance: If a loan was held by a failed bank and the lien on the property was not released, the FDIC may be able to assist in obtaining a lien release for customers of failed banks placed into FDIC Receivership.
Purpose of a Release of Mortgage Lien
The primary purpose of a release of mortgage lien is to provide official notice that the prior lien on a property has been paid in full and is released. This is important for several reasons:
- It removes the lender’s claim against the property, allowing the owner to sell or transfer the property without any encumbrances.
- It clears the title of the property, making it easier to obtain new financing or insurance.
- It protects the owner from potential legal challenges or claims related to the unpaid mortgage.
Recording the Release of Mortgage Lien
Once a mortgage loan is paid off, the lender is responsible for issuing a release of mortgage lien. This document must be recorded in the Land Records office in the county where the property is located. Recording the release makes it official and provides public notice of the lien release.
Process for Obtaining a Release of Mortgage Lien
The process for obtaining a release of mortgage lien may vary slightly depending on the circumstances. In most cases, the following steps are involved:
Contact the Lender
The first step is to contact the lender who holds the mortgage loan. They will provide you with the necessary instructions for obtaining the release of mortgage lien.
Gather Required Documents
Depending on the type of loan, you may need to provide certain documents to the lender, such as a recorded mortgage or deed of trust, recorded assignments, title search or commitment, and proof of payment.
Submit Request
Once you have gathered the required documents, submit them to the lender along with a request for a release of mortgage lien.
Processing Time
The lender will typically process the request within a certain timeframe, which may vary depending on the lender and the complexity of the case.
Issuance of Release
Once the request is processed, the lender will issue a release of mortgage lien. This document will be recorded in the Land Records office to make it official.
FDIC Assistance with Lien Releases
In some cases, the FDIC may be able to assist in obtaining a lien release. This is typically the case for customers of failed banks that were placed into FDIC Receivership. If you believe you may be eligible for FDIC assistance, you can contact them for more information.
Conclusion
A release of mortgage lien is an important document that provides notice that a property is free and clear of a lender’s claim. It is essential to obtain a release of mortgage lien when you pay off your mortgage loan to ensure that your title is clear and to protect yourself from potential legal challenges. By following the steps outlined in this article, you can ensure that the release of mortgage lien is processed smoothly and efficiently.
Sources
- How to Get a Mortgage Lien Released – PropLogix
- Obtaining a Lien Release – FDIC
- Releasing a Mortgage Lien – Federal Title
FAQs
What is a release of mortgage lien?
A release of mortgage lien is a document that indicates that a mortgage lien on a property has been satisfied and released. It provides official notice that the lender’s claim against the property has been removed.
Why is a release of mortgage lien important?
A release of mortgage lien is important because it clears the title of the property, making it easier to sell or transfer the property, obtain new financing, or insurance. It also protects the owner from potential legal challenges or claims related to the unpaid mortgage.
How do I obtain a release of mortgage lien?
To obtain a release of mortgage lien, you need to contact the lender who holds the mortgage loan and request a release. You may need to provide certain documents, such as a recorded mortgage or deed of trust, recorded assignments, title search or commitment, and proof of payment.
What if I have lost the release of mortgage lien?
If you have lost the release of mortgage lien, you can request a duplicate copy from the lender. You may need to pay a small fee for this service.
Can I sell my house if I don’t have a release of mortgage lien?
It is not advisable to sell your house if you do not have a release of mortgage lien. The lender’s claim against the property will still be valid, and the sale could be held up or even canceled.
What should I do if I have paid off my mortgage but have not received a release of mortgage lien?
If you have paid off your mortgage but have not received a release of mortgage lien, you should contact the lender immediately. They may have overlooked sending the release or there may be some other issue that needs to be resolved.
How long does it take to get a release of mortgage lien?
The timeframe for obtaining a release of mortgage lien varies depending on the lender and the complexity of the case. In most cases, you can expect to receive the release within a few weeks of submitting your request.
What if the lender who holds my mortgage has gone out of business?
If the lender who holds your mortgage has gone out of business, you may be able to obtain a release of mortgage lien from the FDIC. The FDIC is a federal agency that insures deposits in banks and savings associations. If the lender was a bank or savings association that was insured by the FDIC, you can contact the FDIC for assistance.