What Documents Do I Get After Paying Off Mortgage?

paying off mortgageFinished paying off your mortgage? Below is a list of documents you should receive from your lender after paying off your mortgage.

Q: My husband and I love to read your articles in the Home section of our local paper.

We are close to paying off our home mortgage and would like to know the documents that we will receive from the mortgage company once we finish paying off our mortgage.

Our loan was recently transferred to a new servicing company that we are not familiar with. This new company does not have the same level of service or rapport with us as customers. We want to receive all the appropriate documents (especially if they are required by law) to show that we own the property free and clear.

A: Congratulations on getting close to paying off your home in full. Not many homeowners get to say that they’re mortgage-free.

When you pay off your loan and you no longer have a balance with the lender, the lender should automatically show your account as having no balance. You’d assume that as a given, but you need to distinguish between different kinds of mortgage loans.

If your loan is the standard 15-year or 30-year fixed-rate mortgage, your lender should send you a letter telling you that you’ve paid your mortgage in full and enclose the original note and mortgage you signed many years ago. Each of those documents may be stamped “cancelled” by the lender. (Some of our readers actually frame their canceled mortgage document!)

The note you signed some time ago is an instrument that gives the holder the right to collect money under the loan. One lender may transfer that note to another lender and each subsequent lender can rely on the note to claim payment from you. Think of your note as a check that’s written to a friend. The friend doesn’t cash the check but endorses it over to a different person. At some point, the holder of that check may want the money owed under the check.

Because the note you signed is a legal instrument, you want to get it back and see that it is cancelled.

But if you have an equity line of credit – a loan against which you can borrow, repay and borrow again –the lender knows you can withdraw funds in the future, on demand. If this is the kind of loan you’re asking about, you won’t get anything from the lender unless you tell the lender that you want to close the loan and terminate the arrangement where you can borrow additional funds.

Once you terminate an equity line of credit or if term ends and you have no balance on it, you’d expect to get the cancelled note and mortgage back from the lender.

So if your loan has come to an end and you’ve paid it off in full, and you’ve received from the lender your cancelled note and mortgage, you still need the lender to release the lien it had on your property. In some states, your lender may send that release document straight to the office that records or files property documents where you live. That document may be called a “Mortgage Release,” “Release of Deed of Trust,” or may be referred to by some other similar name. You could then check with your local recorder of deeds office to see if the release has been filed.

When you took out your mortgage, your lender had a lien placed on your home to have your home serve as security in case you failed to make payment sunder your loan. Once you pay off your loan, the release of lien tells the world your property is no longer encumbered by that lien.

To summarize, you need to get back your original note, mortgage, the release document and final statement from the lender showing your loan paid in full. That should be it. With those documents, you should have enough to have comfort that you’re done with the lender.

Please remember to contact your homeowner’s insurance company to have them remove your lender’s name as an additional insured on your policy. Now that your loan is paid in full and don’t have a lender, you don’t want to deal with that lender in the future if you suffer a loss on your home and make a claim with the insurance company.

Also, some lenders have become quite slow in returning the note and mortgage back to their borrowers. If you don’t get these documents back, but the lender does release the lien and you have a statement from the bank showing that your loan balance is zero, you should be fine.

While it would be great to have the original documents, a quick check of your credit at AnnualCreditReport.com should show that your lender has reported that the balance outstanding on your loan is now zero.

A final wrinkle: if the release is sent to you directly by the lender, you must take that document to your local recorder of deeds office or other office where real estate documents are filed and record or file that document. Once you do that, your property will then show that the lien of the lender has been released.

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3 Responses to What Documents Do I Get After Paying Off Mortgage?

  1. John Reed says:

    Ok… so here’s a question… under what law is the requirement to return the note? Let’s say you’ve lost your house to foreclosure, the Bank has decided not to go after a defeciency… I am sure there would be some kind of statute of limitations involved… but after those limitations have acrued, then under what law would the ex-homeowner demand the return of his note?

    Thanks in Advance!


    • Concerned citizen says:

      Unfortunately, while this article provides good information for what SHOULD happen, it does not say really anything about what DOES happen today. The game is not the same as it used to be.

      In the good old days, you would go down to your local bank, and take out a mortgage there. You would sign a promissory note and a mortgage(or in some states, a deed of trust). The promissory note would stay locked in the vault at that local bank until you made your final payment…at which time, the bank would cancel the note and hand it over to you. Those days are long gone.

      If you are like most of us–myself included–you will discover that your “original lender” is no longer in the picture on your loan. These loans are often packaged into securitized trusts, and sold, resold, even sold again. Many times, we were never told of these sales, even though the law requires the lenders to notify us. This presents many problems. One such problem is “where is the original documentation?”

      Think of it this way. Your promissory note is an instrument, kind of like a check. Let’s say you write me a check for $1000. I take that check, make 50 photocopies of that check, and sell them. If someone tried to present one of those photocopies at your bank for payment, the bank would NOT pay it. Why? Simple–the note is a legal document. A photocopy is not sufficient. You need the ORIGINAL note to be entitled to payment. Make sense? Good. Now that you understand that, toss that knowledge right out the window, because the banks have either lost or intentionally destroyed millions of original notes. I’m not kidding. Don’t believe me? Go attend your local court on foreclosure hearing days. You will see that NONE of the entities that is foreclosing on homeowners can present the original note. They sometimes can present COPIES, but we just covered that a moment ago. The copy is not supposed to be sufficient, but unfortunately, it has been determined to be “enough” in most places to allow them to foreclose.

      So, let’s say you are not in foreclosure and you just want your original note back after paying off the loan. Good luck with that. If these banks lost or destroyed your note(and it’s a very high probability that yours is among those), then obviously you cannot ever get it back. The best you can hope for is a cancellation of the note to be filed in your county recorder’s office. This “should” be sufficient. But then again, you need to remember that most of these banks and lenders have already been found to be breaking the law in some way in recent years. People have had foreclosure cases filed against them when they never took out a mortgage on their homes. People have had cases filed against them when the mortgage was already paid off. Others have had foreclosure actions filed against them by a “bank” that does not even own their loan! Remember the 50 photocopies I mentioned? That is the same thing. Our loans have been bought, sold, passed around, and horse traded based on a photocopy for years now, even though the law says it is not legal. I recently learned that the mortgage I took out a decade ago was sold off and securitized into a trust the same year I took it out….I was supposed to be notified, by law, within 30 days of the transfer. I found out earlier in 2015, and I had to find out on my own. The lender never told me. That lender did not own this loan since that year. But that did not stop this same lender from “selling” this same loan in 2014 to someone else. Think about that for a moment. The lender sold the loan in 2005. They no longer owned it. So, how could they sell something in 2014 that they stopped owning 9 years prior? Short answer is they CANNOT. But they did anyways, and they did it by providing a photocopy of part of the original note to the “new owner” as “proof” that they had the legal authority to sell.

      So why does this all matter? Simple. Until you have that original note back in your hands, it’s possible for someone to come along, claiming to possess your original note, and try to take your home. If you have the cancelled note, and someone tries to do that, it’s relatively simple to put a stop to it. But, if you do not have a cancelled original note in your possession, anyone with a copy can come along and try to make a claim for foreclosure. In some states, like California, they do not even need to sue you to foreclose. The Uniform Commercial Code, which every state has adopted some form of, governs the issue of notes and how they must be handled. But the courts are most often ignoring the UCC, even when homeowners bring that law up.

  2. Margalit says:

    I have that problem too

    Your information:
    “A final wrinkle: if the release is sent to you directly by the lender, you must take that document to your local recorder of deeds office or other office where real estate documents are filed and record or file that document. Once you do that, your property will then show that the lien of the lender has been released.”

    is not quite correct. Our registar of deeds tells me that I have to go to (and pay!) a title company to get that release if the lender did not do it

    When getting a home equity line of credit I found the mortgage never was released.

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