If you are devoted and diligent enough to make all of your mortgage payments over 30 years, you will eventually pay off your mortgage. A more likely scenario, however, involves refinancing your mortgage with a new loan, which also results in the prior mortgage being paid off. In either case, satisfaction of your old mortgage must be recorded in the county real estate records in order for the lien of your old mortgage to be terminated.
What happens if you pay off your mortgage and the mortgage lender does not take steps to have the mortgage marked “satisfied” in the real estate records? Enter the Pennsylvania Mortgage Satisfaction Law.
The Mortgage Satisfaction Law provides that any mortgagee who has received full payment of all sums due under a mortgage must, upon request of the mortgagor, enter satisfaction on the real estate records where the mortgage was originally recorded. This is typically accomplished by filing a signed “satisfaction piece” with the Recorder of Deeds.
If the mortgagee does not, after request from the mortgagor, take steps to have the mortgage marked satisfied on the record, Pennsylvania law provides for a potential fine in an amount up to the full amount of the original mortgage. Given the size of the potential fine, which is payable to the mortgagor, failure to satisfy mortgages upon full payment is serious business.
Recent case law makes it clear that lenders will not be subject to the statutory fine unless it can be demonstrated that all sums due under the mortgage have been paid, that the mortgagor requested (either orally or in writing) that the mortgage be marked satisfied on the record, and that the mortgagee failed to mark it satisfied within 45 days following the request. While a verbal request to satisfy is sufficient, it is difficult to prove. Mortgagors should always request satisfaction in writing.
Cases under the Mortgage Satisfaction Law seem to come in cycles, often following a refinancing boom. Lenders get so busy with making new loans that they forget to promptly satisfy old loans upon full payment. Given the serious penalty involved, the Mortgage Satisfaction Law remains a trap for unwary lenders and a powerful weapon in the hands of consumers.
– Kevin Palmer