Question: I’ve seen your articles on the subject of knowing for sure whether your home is paid off. I pursued finding out but am still getting mixed results.
I wonder if you could help me. In your articles you say to check to make sure that the proper satisfaction documents have been filed. I paid off my home loan in early January of 2008 and the closest thing I see in the public records is a reconveyance document that is dated Jan. 31, 2008, and is titled Substitution of Trustee and Full Reconveyance.
Is that what I am looking for or should I see something additional?
Answer: The document you have found on the public records indicates that your mortgage has been paid in full and the lien has been removed from the title to your property.
So congratulations, you own your home free and clear.
Many people are confused about the process of paying off a mortgage so I’m glad to get this opportunity to further clarify what the legal documents are and how they work.
Contrary to popular belief, in this state most of us do not actually have a mortgage on our home. A mortgage is a type of legal document that requires the lender to go to court to foreclose on the borrower if they fail to make their loan payments as agreed.
It is a very long and expensive process to foreclose on a mortgage.
To make it easier, cheaper and faster to foreclose on a homeowner who is not making his or her loan payments, a document called a deed of trust was developed to be used in place of a mortgage.
Unlike a mortgage, a deed of trust is foreclosed outside the court system and the whole process can be completed in as little as 120 days, though it typically takes longer than that. The foreclosure process is handled by a neutral third party called the trustee (often a title company) who takes care of all the legal notices and handles the auction of the property at the courthouse. The auction is called a trustee sale.
So the trustee on the deed of trust is the person or company responsible for making sure that the terms of the home loan are met by the borrower. If you don’t make your loan payments, the trustee has the legal authority to sell your house at auction to pay off the lender. And if you make all of your loan payments as agreed, the trustee has the duty and responsibility to file a document called a reconveyance to remove the lender’s lien on your house and reconvey full and clear title to you.
Most companies that operate as trustees are in the foreclosure business, there’s very little money to be made processing a reconveyance. So when you pay off your loan in full, the lender often uses a document called a substitution of trustee and full reconveyance, which substitutes a new trustee who simultaneously executes the reconveyance to release the lien against your home for the loan. So what happens is the trusteeship is typically transferred from a title company to a department of the bank that handles processing reconveyance documents.
It’s a little confusing, but this has the same effect as a standalone full reconveyance document showing that your loan has been paid in full and the lien has been removed. So as I said at the beginning of this column, it looks like you’re home free.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com.
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