- October 15, 2013
- All Issuing Offices
- UNDERWRITING - Documenting Paid-Off Mortgages and Deeds of Trust
This bulletin replaces SLS2013010.
If you omit or remove an exception from a title insurance policy for a mortgage or deed of trust for which you have received funds to pay off, you must promptly remit such funds to the lender/servicer, as applicable. Also we suggest that you follow up to confirm that a satisfaction, release or reconveyance of the mortgage or deed of trust, as applicable, has been prepared and recorded.
Upon receipt of full payment, lenders are obligated to produce an instrument in recordable form evidencing the satisfaction of a mortgage or deed of trust. However, their procedures may vary. Lenders or their servicers may send the instrument to the borrower, to the address of the subject property, to you, or directly to the recording office. If the satisfaction, release or reconveyance is sent directly to the borrower or to the property address, the parties may not understand the importance of recording it in order to remove the lien from the real property records. Prior to closing, we suggest that you familiarize yourself with the payoff lender's practices, and we also suggest that you advise the borrower and new owner, if any. After the closing, you should retain copies of: (a) the final payoff statement from the lender, (b) your final settlement statement, and (c) documentation verifying that the payoff amount was both sent to and received by the lender.
Many states have laws or regulations governing a payoff lender's obligations to deliver a satisfaction, release or reconveyance, as applicable. Some states also have alternative methods of recording an instrument documenting a paid off mortgage, in the event that a lender fails to provide it. The following is a list of states that have alternative methods of documenting a paid off mortgage or deed of trust under some circumstances. Please click on the link to view the section of Real Estate Practices titled "Certificate of Release (of Mortgage)".
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.