What must a lender file once the borrower pays off a loan?

What must a lender file once the borrower pays off a loan?

• A. A new mortgage deed
• B. A Satisfaction of Mortgage in the county courthouse
• C. A mortgage discharge form
• D. A lien release certificate

Answer: (B)

When a loan is paid in full, the lien on the property must be officially released so the borrower has clear title. The lender does this by preparing a Satisfaction of Mortgage (also called a Release of Mortgage) and recording it with the county’s recording office (often the county recorder or registrar of deeds, sometimes described as the county courthouse). Recording the document provides public notice that the loan is satisfied and removes the lien from the property records. Without this filing, the mortgage could still appear as a lien even though the debt is paid. Other terms like a mortgage discharge form or a lien release certificate may be used in some places, but the formal release is the Satisfaction of Mortgage filed in the county records.

When a loan is paid in full, the lien on the property must be officially released so the borrower has clear title. The lender does this by preparing a Satisfaction of Mortgage (also called a Release of Mortgage) and recording it with the county’s recording office (often the county recorder or registrar of deeds, sometimes described as the county courthouse). Recording the document provides public notice that the loan is satisfied and removes the lien from the property records. Without this filing, the mortgage could still appear as a lien even though the debt is paid. Other terms like a mortgage discharge form or a lien release certificate may be used in some places, but the formal release is the Satisfaction of Mortgage filed in the county records.