New State Law On Real Property Title Clearance Now Available
August 6, 2004
Uniform Residential Mortgage Satisfaction Act Completed
A new law addressing the problems that frequently arise in the process of paying off a mortgage loan was just approved today by the National Conference of Commissioners on Uniform State Laws (NCCUSL) at its 113th Annual Meeting in Portland, Oregon. The Uniform Residential Mortgage Satisfaction Act provides rules and procedures for the clearance of fully paid real estate mortgages from the real property records in every state.
Although this process has traditionally been straightforward, problems can and do arise. Most lenders originating home mortgage loans no longer retain those loans in their portfolio, but instead sell those loans on the secondary mortgage market. The widespread sale of home mortgage loans has complicated the payoff, discharge and release of mortgage instruments. At present, solving these practical problems forces mortgagors to incur additional costs, and delays often result in the payoff and refinancing process.
While all the states currently have laws that require a mortgagee to act promptly to provide title-clearing documentation, the laws vary widely, in both notice and enforcement provisions.
The chair of the drafting committee, Edward F. Lowry, Jr., of Arizona, noted that the Uniform Residential Mortgage Satisfaction Act provides reliable time periods for obtaining mortgage satisfaction and realistic penalties when not obtained in a timely manner.
The new act attempts to ensure that mortgagees and their servicers have an appropriate incentive to act promptly to clear a landowner’s title. The act provides that if a mortgage lender has not recorded a satisfaction of the mortgage within 30 days after receiving payment of the obligations secured by that mortgage, the owner of the mortgaged land may make written demand upon the mortgagee. If the mortgagee fails to record the satisfaction within the first 30 days, it is then liable for the mortgagor’s actual damages. If it fails to act by the end of the second 30 days, it is then also liable for a civil penalty along with court costs and attorney’s fees.
The Act also permits the owner of the mortgaged land to initiate a procedure using an agent to record an affidavit of satisfaction that effectively clears the title of the satisfied mortgage. The mortgagee may also be liable for any damages as a result of its delay.
The drafting committee on the Uniform Residential Mortgage Satisfaction Act was chaired by Edward F. Lowry, Jr., of Scottsdale, Arizona. Other committee members included: Ellen F. Dyke, Reston, Virginia; Robert L. McCurley, Jr., Tuscaloosa, Alabama; Neal Ossen, Hartford, Connecticut; Elwaine F. Pomeroy, Topeka, Kansas, Regina R. Quinn, Jackson, Mississippi. R. Wilson Freyermuth of Columbia, Missouri, served as the committee’s reporter.