A mortgage is an instrument of security usually for an accompanying loan. When recorded at the county Recorder of Deeds’ office, a mortgage creates a lien on real property until the underlying debt is paid. Simple enough.
Throughout history, nefarious lenders would attempt to extract additional consideration from borrowers after final payment of a loan by simply delaying or refusing to mark a mortgage satisfied in the formal registry. The landowner was powerless to remove the mortgage lien, a cloud on his title, even if the loan was fully repaid.
In 1715, sixty-one years before the founding of our republic, the predecessor to the Pennsylvania State Legislature passed a bill requiring mortgagees to mark fully paid mortgages “satisfied” so as to clear the record of a borrower when full payment was made. Those who refused risked imposition of a financial penalty. The mortgagee was required to “enter satisfaction upon the margin of the record of such mortgage recorded in the official office for the recording of deeds.”
The Mortgage Satisfaction Law, 21 P.S. 681 et seq, exists in a slightly different form in the present day. Mortgage companies, banks and other lenders are obligated to mark fully paid mortgages “satisfied” within 45 days of full payment provided that: (1) the administrative satisfaction fee is paid; and (2) “request” is made by the landowner. The request should be in writing.
We have found that in times of frantic refinancing, mortgage companies and banks often cannot or simply overlook their obligation to mark fully paid mortgages “satisfied” in a timely fashion. The penalty for failure is a civil fine to be imposed by a jury or judge up to the value of the mortgage. While damages may be related to actual losses and there is no guarantee that a large payment would be awarded, we have handled a number of these cases and in each situation the bank has made a substantial payment in order to avoid a jury’s wrath.
If you have any questions about the Mortgage Satisfaction Law, or if you “can’t get no satisfaction”, please call.