Two years ago I sold my home. This past week I received a phone call from any Attorney’s office looking for the Discharge of Mortgage from that transfer. I know at the time of closing that the mortgage was paid, I saw the check to the bank. What are they now looking for?
Oh yeah banks. You want to know the largest pain in the *** for real estate attorney’s? It’s banks. Your Attorney had you contact your old bank, or received a release from you to allow your closing Attorney to contact the bank on your behalf. This was to secure a pay-off statement. The payoff statement included the amount of principle owed on the mortgage, any interest and late fees due and a fee to record the Discharge of Mortgage in the County Clerk’s Office.
Great, the bank got it’s money, they have the filing fees, they should just turn around sign a Discharge and file it. No big deal. (And it really is not a big deal). NOPE the bank takes the money, and who the (h-e double hockey sticks) knows what they do then. I think the papers get put in a file, and put away. How hard is it to just have the Discharge done up and put it in the mail. They know where to send it, we have to give them that information, they have the money to file it, we gave them that also. But nooo, it doesn’t always happen. (One of the worst offenders is Chase by the way, hope they were not your lender).
Now not all problems are the Banks. On older mortgages (those paid off in the 50’s, 60’s 70’s and even the 80’s) the banks did not collect the filing fees. They sent the original Discharge of Mortgage to the home owners. Now the note from the Bank told the homeowners that this was their original Discharge of Mortgage (or sometimes called a Satisfaction of Mortgage) and it was their responsibility to file it in the correct County Clerk’s Office. With these, many homeowners promptly put these in a file, or burned them with their original mortgage documents, never to be properly filed.
If the Discharge is not recorded in the Clerk’s Office canceling the mortgage, then the mortgage is still ‘legally’ open. It is still on your credit record. It’s still a lien on the house that you sold, and you are still legally responsible for it. That’s why the Attorney called you, they are looking to see if you have something in your files that is the original Discharge that needs to be recorded. Or they are looking for your HUD closing statement showing that it was actually paid off. They also may need your account number, or your social security number to get anywhere with the bank. Because that’s now what the Attorney has to do, contact the bank and basically beg them to get the Discharge filed. (Any many times they will simply send the Discharge to the Attorney, without the filing fee, so they keep the fee that you paid, and the Attorney’s clients pay another fee to actually file it).
Now the legislators did decide to write a law that says that the Banks must file the Discharge within a certain period of time. Nice. No teeth in the law. No penalty if the Banks don’t file it. No enforcement procedure if the Banks don’t file it (wonder if the banks are campaign contributors?). Thanks Albany.
My office, and all real estate attorney’s offices, spend hours tracking down old mortgages that should have been Discharged. Additionally when the Attorney attends the closing on behalf of the Sellers’ the new bank wants the Attorney to sign a guarantee that insure not only that the existing mortgage will be paid from the proceeds of the sale of the house, but also that the Discharge will be filed in the County Clerk’s Office. I refuse to sign such a guarantee, because I can’t get Banks to do anything, and they certainly won’t be intimidated by me contacting them to do their job.
Help out the best you can. If you had a contact at your old bank, call them, and put some pressure on them. Remember this outstanding debt is still in your name.
As always this is a general answer to a general question. Each legal issue may contain other factors that need to be discussed with your own attorney.
If you have a question for Attorney Kukuvka, please mail them to her at 330 E. Main St, Palmyra, NY 14522 or e-mail to cklaw@verizon.net.