Does Release of Mortgage Lien Signify Title?
- A mortgage satisfaction is a type of document used in many states to help end a mortgage. The lender records this document stating that the borrower has completely paid off the loan and that the contract and note can be considered fully satisfied. Filing this document is a key step in releasing the mortgage, removing it entirely and ending the ability of the lender to foreclose on the property.
- While the mortgage satisfaction and the end of the lien are both necessary parts of ending the mortgage, they do not by themselves move a title or directly affect the title. The title is a legal document that can only be changed by an authorized party, typically a title company. A deed in trust or related process is how a lender (or third party, such as an escrow company) holds the title until the loan is paid. When the mortgage is satisfied, it is time to move the title again.
- The title company reconveys the title after the mortgage is fully paid off. This means the title company reassigns the title from the lender or trustee to the borrower. It is this reconveyance that truly signifies the title has been transferred and allows the borrower to fully own the house. In some states, the mortgage satisfaction and title reconveyance are the same document, and both steps are completed at the same time.
- There are other types of releases a borrower can utilize to remove a mortgage, but they are rarely related to the title. For instance, a borrower may be able to achieve a release of a second mortgage by filing for bankruptcy when there is not enough money in a home's equity to cover the second mortgage as well as the first. In this case, the first mortgage lien still exists, and the title is not affected at all.