What Happens After a Release of Mortgage Is Presented?
Written by Marie Huntington; Updated June 23, 2018
Paying off your mortgage is a cause for celebration for most homeowners but hold up, you're not free and clear just yet. Once you've paid off your outstanding mortgage debt, the lender must prepare and issue a release of mortgage. This document officially discharges you from the debt obligation and removes the lien against the property. The lender should send a copy of the discharge to you, and also to the closing attorney and settlement agent if you're selling the property.

Request for Payoff
While the lender issue the release of mortgage, it's actually up to you to request this document. The process starts with the borrower sending written notice to the lender requesting a mortgage payoff statement. This statement includes the full amount of the outstanding debt. After the borrower pays the payoff amount, the lender must provide the borrower with a satisfaction of payment letter. Different states have different rules but generally, the discharge letter will include words demonstrating that the lender has received full payment and satisfaction of the mortgage loan debt. The address of the property must be included in the letter, and the name of the mortgage borrower should also be included.

Deed of Release
A formal deed of release follows the mortgage discharge letter, although sometimes it takes several weeks for this document to come through. The release is similar to a quitclaim deed. By signing it, the lender transfer all its rights and interest in the property back to the borrower. Now, the borrower holds full ownership interest in the property and can transfer his interest to a subsequent buyer without the property being subject to the lender’s mortgage lien. The borrower will need to present the release of mortgage letter to future lenders when the borrower applies for credit as evidence that the mortgage is paid off and the borrower is financially able to repay new loans.

Recording the Mortgage Release
Any real estate instrument that affects the title to a property – including a mortgage release – must be recorded at the register of deeds office in the county where the property is located. The lenders should arrange recording on your behalf. When the lender has recorded the satisfaction of payment letter in the proper jurisdiction, it will provide the borrower with copies of the recorded mortgage release and indexed pages from the register. Recording the release is important, as it tells future buyers and lenders and anyone else who is performing a title search that the property is owned free and clear.
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