Paying off your mortgage is the goal and dream of almost every American. In fact over 30% of Americans own their own with no mortgage. If you pay/paid off your mortgage do you know what you need to prove that it’s paid off?
Our team recently had a listing where the home was debt free, the owners had paid the mortgage off over 15 years ago! Woohoo! We listed the house, we received 4 offers and it went pending the first day on the market. Closing was set for 36 days later. Should be a nice, simple deal.
During the pending period (36 days in this case) one of the important steps of the process is a “title opinion.” A title opinion is the written opinion of an attorney, based on the attorney’s title search into a property, describing the current ownership rights in the property, as well as the actions that must be taken to make the stated ownership rights marketable. It also reveals if there are any liens or encumbrances… like a mortgage.
The sellers of the above property had told me they didn’t have a mortgage anymore but the title opinion showed a mortgage and a home equity line of credit were still “open” against the property. No worries, we’ve seen this before. Occasionally the bank or lender fails to record the release (pay off/close) of the mortgage. The closing agent in our office contacts the lender, they confirm the mortgage has been paid off and the bank/lender sends us a release to record at the county.
But in this case the original bank is no longer open. We research and find out it’s been absorbed by a big bank. No problem, we contact the big bank, sit on hold for long amounts of time, get transferred and transferred and transferred again. Finally talk to someone in charge and they promise to send the releases before the day of closing. We follow up every day… fast forward to the day before closing. Still no release. We can’t close, we can’t sell the house until we have the releases.
My seller, the closing agent from my office and myself spent over 2 hours on the phone, my seller sat in the local branch for almost 4 hours, we collectively sent 27 emails and left 13 messages and finally at 4:34pm the night before closing the bank finally emailed the releases. No explanation. No I’m sorry this took so long. Good news is that we were able to close at 9am the next morning.
Back to the moral of my story… if you have or plan to pay off your mortgage make sure that you #1 – keep a copy of how you paid it off (cancelled check, wire transfer, funds transfer, etc) #2 keep a copy of the bank statement, account statement, etc that shows the transaction and #3 about 30 days after your bank/lender for a copy of the recorded release!!