What Is a Satisfaction of Mortgage?

A satisfaction of mortgage is a document that confirms a mortgage has been paid off and details the provisions for the transfer of collateral title rights. Mortgage lenders are required to prepare satisfaction of mortgage documents that must be signed by all parties associated with the mortgage loan and collateral title.

Key Takeaways

  • A satisfaction of mortgage is a signed document confirming that the borrower has paid off the mortgage in full and that the mortgage is no longer a lien on the property.
  • Lending institutions are responsible for preparing and filing the satisfaction of mortgage with the appropriate county recorder, land registry office, city registrar, or recorder of deeds.
  • Some borrowers prepay their mortgages by making extra mortgage payments in an effort to pay off their mortgages faster.
  • A satisfaction of mortgage document includes details of the mortgage loan, provisions releasing the lender from a lien against the property, and the steps taken to transfer the property title.

How a Satisfaction of Mortgage Works

Lending institutions are responsible for preparing and filing the satisfaction of mortgage documents. Procedures surrounding satisfaction of mortgage documents and their filing are governed by individual states.

Many financial planners recommend accelerating mortgage payments in order to pay off a mortgage faster. Making the occasional extra mortgage payment—assuming the lender allows it without penalty—can slash months off the mortgage term and save thousands in interest costs. A viable strategy to expedite paying off a mortgage will help homeowners get the coveted satisfaction of mortgage document even sooner.

The satisfaction of mortgage is also useful if the owner wants to pledge the property as collateral for a business or personal loan. Of course, the merits of taking out a loan using the house as collateral, after spending decades paying off the mortgage, should be thoroughly considered before being done.

The Satisfaction of Mortgage Documentation Process

When a borrower prepays their mortgage or makes the final mortgage payment, a satisfaction of mortgage document must be prepared, signed, and filed by the financial institution in ownership of the mortgage. The satisfaction of mortgage document is created by a lending institution and their legal counsel.

Oftentimes the original mortgage lender will be responsible for the mortgage throughout its life. In some cases, a mortgage may have been sold by the mortgage lender to another financial institution. If sold, the owner of the mortgage at the time of the final payment is responsible for completing the satisfaction of mortgage documentation. If multiple parties have been involved in the loan, then it may take a few weeks for the final satisfaction of mortgage document to be prepared.

A satisfaction of mortgage document will include the names of all parties associated with the mortgage. Other basic information will include the details of the mortgage loan and its payments, an acknowledgment that all payments have been made in full, details on the mortgage loan’s collateral property, provisions releasing the lender from a lien against the property, and the steps taken to transfer the property title.

A satisfaction of mortgage document must be signed by all parties to be valid. Once signed it must be filed according to the procedures mandated by the state. Usually, the documentation will be filed with the county recorder, land registry office, city registrar, or recorder of deeds.

Once the satisfaction of mortgage is recorded with the appropriate agency, the mortgagor (the individual or entity that borrowed the money to buy the property) will have a clear title to the property.

Special Considerations

While the borrower is not directly responsible for creating the satisfaction of mortgage document and filing it with the appropriate agency, they should still follow the process closely to ensure that all steps have been completed. Some states will provide a specific timeframe for the completion of the satisfaction of mortgage documents. This can work to the advantage of the borrower in ensuring that the process occurs in a timely manner.

Once the process for the satisfaction of mortgage document has been completed, the borrower should also receive filing confirmation from the appropriate filing agency. In the event that a satisfaction of mortgage is not filed and recorded with the appropriate agency, the property could continue to show a lien against it despite repayment.