Several years ago we ran an article explaining Pennsylvania’s Mortgage Satisfaction Law, which requires lenders to mark fully paid mortgages “satisfied” on the record within 45 days following full payment by the borrower. The law generally requires that the administrative fee for satisfying the mortgage be paid and that the homeowner make a request to the lender that the mortgage be satisfied.
Ordinarily this is a routine procedure and most lenders are diligent about satisfying paid mortgages. However, in these boom times for real estate and refinancing it is not unusual for lenders to overlook their duty to satisfy old mortgages. Put simply, they are more interested in devoting their resources to processing new business rather than cleaning up old business.
There are stiff penalties for failing to mark a paid mortgage satisfied in a timely fashion. Courts are authorized to impose a civil fine in an amount up to the value of the mortgage.
Most real estate closings are handled by title companies who typically send the mortgagee (the lender) the mortgage payoff, along with the necessary satisfaction fee and a request that the old mortgage be marked satisfied. This should be sufficient to trigger the lender’s statutory duty to satisfy the mortgage within 45 days. If the lender does not do so it risks serious monetary penalties in favor of the borrower. We have handled a number of these cases with several resulting in the bank making a substantial payment to the borrower in order to avoid imposition of a statutory penalty under the Mortgage Satisfaction Law.
If you have recently paid off your mortgage, either by way of refinancing or a sale, you are entitled to have your old mortgage satisfied within 45 days. If your lender does not comply with its duty and you have questions, feel free to give us a call.
— Kevin Palmer