There’s no better feeling for both lender and borrower than when a loan is paid in full. But it’s not as simple as making the final payment to clear the title.
It’s the lender’s responsibility to execute the proper steps for a lien release, also known as a release of mortgage. And if the lender has a lot of mortgage releases to process while relying on manual processes, it could turn great news into a potentially costly challenge.
Let’s dive into mortgage releases and how lenders can make the process more accurate and more efficient.
What is a release of a mortgage?
The borrower files the appropriate paperwork with the register of deeds in the same county in which the mortgage or deed of trust was recorded. The lender must then complete the release of the lien documents to eliminate the interest on the loan and to give the property owner a clear title.
What happens when a mortgage is satisfied?
Lenders usually pull or automatically receive a report of paid-off loans that need to be satisfied. They might also receive the payoff statement from loan officers directly. This is the trigger to start the mortgage release process. Lenders will also receive tickler reports as reminders that the payoff is not satisfied.
Data needed to complete a mortgage satisfaction includes:
- Owner name (as it appears on the original legal description)
- Document number (from the original mortgage)
- Return address
- Parcel number
- Date of satisfaction
- Approving officer name and signature
- Notary name, signature, expiration date, and notary stamp
- Full legal description
- Proper mortgage release forms
- License number of the drafter
Lenders will track to make sure the satisfaction is recorded and save a copy of the recorded satisfaction in their imaging system. This is when they consider the payoff to be complete.
How do lenders typically manage mortgage releases in-house?
Lenders who don’t use outsourced mortgage release services typically use manual processes in-house. This could look like
- manually keying data into a blank mortgage recording document or integrating with their systems to feed the data into forms; or,
- copying and pasting the data from their loan origination system (if data points are available).
If the data in the mortgage satisfaction isn’t entered exactly as required, the satisfaction will be returned and will be in jeopardy of being recorded late.
Mortgage release is usually not a task that one employee spends all of their time doing. Often there are several people working together to complete the satisfaction, while some lenders have a specific person or persons assigned to complete the satisfaction.
The amount of time it takes to record a mortgage ranges from 10–30 minutes. Some lenders use a blank word document while others use a fillable PDF form. Lenders will input the legal into the mortgage satisfaction document unless the legal is too long. If too long, they will attach a separate legal document. This can cause issues if the legal is a scanned document or blurry and difficult to read. There can also be special form requirements for the jurisdiction in which the mortgage was recorded.
Because of recent volumes, typical turnaround times to submit a satisfaction for recording have increased. What was once a 24-hour turnaround has increased in the last year to as many as five business days.
What happens if mortgage releases aren’t completed in time?
Satisfactions need to be completed and filed within 30 days of the loan closing. If satisfactions aren’t completed on time, it can result in a fine (of $500 or more), and potentially a negative customer experience.
Why outsource mortgage release services?
With many lenders handling satisfactions of mortgage in-house, there can be added responsibilities to maneuver. For countless teams, this also means navigating the landscape of manual processes—and executing timely mortgage lien releases for clients.
When making mortgage lien release software purchasing decisions—clients in this industry primarily focus on the following factors:
- Lack of resources or the need to control costs (turning fixed costs into variable costs).
- Manual and time-consuming processes.
- Lack of lien release compliance knowledge by state (turn times, trustee knowledge or connections).
- Lack of recording knowledge (form requirements, fee requirements, signing requirements, etc.).
- Unknown risk(s) regarding Mortgage Electronic Registration System (MERS) compliance.
- Poor experience with their current vendor’s performance.
Outsourced mortgage release services can help.
Instead of handling all of the tasks in-house, lenders can count on a third-party vendor to handle tasks such as:
- Document image retrieval.
- Compliant mortgage lien release document generation for all recording jurisdictions nationwide.
- Compliant workflow that adheres to all state/county compliance timeline requirements.
- Substitution of trustee services, when needed.
- E-recording services.
- Document tracking & real-time status reporting.
- Real-time access to recorded documents and recording information.
- Borrower notification letter process.
- Signing authority database.
- Notary logging.
- Document recording.
Mortgage releases made simple
Manual processes are tough on teams already overwhelmed by all they have to do—and put lenders at risk of fines and dissatisfied customers. (Recent spikes in lending mean even more work for financial organizations.)
Let some of the manual processes in your workflow become automated, and rest assured that it's handled and recorded in a timely manner. As your trusted partner with extensive mortgage release experience, Info-Pro will reduce the number of rejections, improve operational capacity, and ensure mortgage lien release compliance while customizing workflows to fit clients’ needs.
Download the guide to learn how Mortgage Release Services can help you process mortgage releases efficiently and accurately.