What documents do you get when you payoff a mortgage: a release of mortgage and a statement of account showing a zero balance due.
By Ilyce Glink and Samuel J. Tamkin
Q: I sold a house and paid off my mortgage. I received a satisfaction letter but no return of my original note from my big box servicer lender. I called several weeks later to request the return of the promissory note and was informed it is not their policy to return notes. How can I get my note back from these thieves?
A: Sorry, but who stole what from you? Those are strong words to use as your lender hasn’t stolen anything. They have failed to send something back to you that historically was returned to the owner of a home. But you’re not alone in getting no satisfaction here: we’ve heard from an increasing number of our readers that their lenders have not, and will not, return the original promissory note and mortgage or trust deed.
Loan documents are signed a settlement or closing
To understand why, let’s recap the timeline: When you go to a lender for financing on your home, that lender gives you the money and in exchange you sign a note promising to repay the debt. You also sign a document that gives the lender the right to foreclose on the home and sell it in case you default on your obligation to repay the debt.
You may sign 20 or 30 documents at a loan closing, but the two most important documents are the promissory note and the mortgage (or trust deed). Once you close, the lender has all of the loan documents in hand. Should the lender decide to sell the loan, the lender signs over the note to the new lender and then assigns the mortgage to them as well.
The promissory note is a negotiable instrument. The person or company that holds that note has the right to collect the payments due on the note. For this reason, the lender would typically return the note and mortgage and stamp them “cancelled” once the homeowner paid off the loan.
The question is what documents do you get when you payoff a mortgage?
Electronic documents and digital records
Given the age of electronic communication and digital records, lenders tend to avoid handling those original documents and may not return them. So, if they don’t return them, what do you do and what does it mean?
Well, those same electronic communications and digital records show that you paid off your mortgage. Once you’ve made your final payment, the lender will send you a final statement showing that your account balance is zero. The lender will also send you a document that they sent to the recorder of deeds or clerks office for filing or recording. This document is the release of the lien of the mortgage or trust deed. Between the release and the account statement, it’s unlikely that your lender or any other could go after you for the non-payment of the debt owed.
Getting back the original note and mortgage
Furthermore, if a lender wanted to go after you, they would need that original note to present in court and you’ll have proof that you’ve paid them in full (your final statement balance). Plus, you’ll have a copy of the “release of mortgage” or trust deed that they sent you.
As we’ve said many times, we’d prefer that you get the cancelled note and mortgage and lenders should be kind enough (and organized enough) to return those documents to you. On the other hand, the risk that something would happen to you due to their failure to return them to you is quite low.
In any case, no one has stolen anything from you, least of all ownership of your property, simply by failing to return a piece of paper.
©2021 by Ilyce Glink and Samuel J. Tamkin