A satisfaction of mortgage is a legal document which indicates that all of the obligations associated with a mortgage have been fulfilled and that the lien on the property has been lifted. In addition, people use this term to refer to the act of completing mortgage obligations. It is very important to make sure that this document is filed properly by the lender and to keep a copy in a personal file, because mistakes can be made, and it is possible for a mortgage lien to remain on a property with a fully satisfied mortgage.
Lenders usually issue a satisfaction of mortgage when the mortgage has been paid in full. However, there may be cases in which a borrower is released from his or her obligations and the lien is lifted. These cases are extremely rare, as lenders are usually not inclined to accept partial repayment of a loan.
When the obligations of the mortgage are satisfied, the lender is required to file a satisfaction of mortgage with the clerk who handles deed records. This allows the lien on the officially recorded deed to be cleared and will leave the property with a clear title if there are no other outstanding liens on it. For example, a lien associated with a home equity line of credit would remain in place after the mortgage was satisfied and likewise a tax lien would not be lifted once a mortgage was repaid in full.
The lender also usually sends the satisfaction of mortgage to the borrower. It is crucial for borrowers to examine the document to confirm that the information is correct, and to request changes if it is not correct. For example, if the document refers to “123 B East Larch Street” and the house is at “123 A East Larch Street,” it needs to be fixed to show the correct address. Borrowers should also keep their satisfaction of mortgage in a safe place, and it is advisable to make a copy as well.
It is also wise to check with the recorder of deeds to confirm that the satisfaction of mortgage has been filed and the lien has been lifted. If there is a problem, it should be brought up with the lender so that the lender can file the proper paperwork. This could become important later, as for example when people go to sell the property. Existing property liens can hang up a sale.