By Thomas Musil
RISMEDIA, July 7, 2008-Q. I will be making my last mortgage payment on my house in the near future. I know I will be responsible for paying insurance and property taxes, but I do not know what information or paperwork I will need to ask for, or receive from my lender to complete my dealings with them. Any information or direction would be very much appreciated.
A. Congratulations on paying off your mortgage. Your question is well founded. Mortgage financing has changed significantly in the past few years and it is highly unlikely that the lender from which you received your mortgage is still involved.
Mortgage financing and the clearing of title for residential real estate has become much more complicated as a result of the packaging and selling of mortgages as securities. While there have been attempts to establish a national uniform practice for mortgage satisfactions (clearing the title when the mortgage is fully paid), the process is determined by state laws.
Typically what you can expect to happen is that the mortgagee (the secured creditor) will send you a payoff statement showing that the mortgage obligation has been satisfied. Second, the mortgagee will record a satisfaction of mortgage with your county recorder to establish in the public records that the mortgage has been satisfied. You should contact the mortgagee and confirm that they will begin this process, but be patient.
Due to the possible delays caused by secured creditors, this may take a few months. A mortgage is used to secure the performance of an obligation and the term mortgage is derived from the French words mort meaning “dead” and gage meaning “pledge.” Accordingly, the word mortgage is well chosen because when the debt is paid the pledge ceases to exist.
Dr. Thomas Musil is the director of the Shenehon Center for Real Estate in the Opus College of Business at the University of St. Thomas in Minneapolis. He has more than 25 years of experience in real estate as a broker, analyst, consultant and expert witness in real estate litigation and arbitration disputes.
© 2008, McClatchy-Tribune Information Services.