Dear Associates:
The large number of mortgage refinance transactions over the past few years
has left the public records with a significant number of paid but unreleased
mortgages and some questionable releases of mortgages.
National lenders and the companies they use to service their loans prepare
and forward mortgage releases for recordation in numerous jurisdictions
throughout the country. The sheer volume of releases, coupled with the
state specific requirements for releasing mortgages can result in errors. Many
releases never make it to record because of the errors. As to others that
are recorded, title searchers and attorneys inConnecticut examining these
releases are frequently confronted with dealing with these errors and must try
to determine which of these releases may be relied upon.
Underwriting Guidelines:
Unreleased, but satisfied prior mortgages:
It is always Stewart's goal to facilitate real estate transactions where
reasonably possible. In transactions where it can be reasonably determined
that a prior mortgage loan has been paid in full and reasonable safeguards are
put in place to assure the satisfied mortgages will be discharged post closing,
Stewart will approve closing with the prior mortgage open of record.
Special permission to close must be obtained from the Connecticut State Office.
When requesting permission to close with prior open mortgages, proof of payment
of the prior mortgage and a written undertaking/indemnification from a prior
title insurer or an undertaking from an attorney should be submitted for
review.
Releases with Errors:
Connecticut Standard of Title 18.4 provides that a "... release of mortgage
is sufficient, notwithstanding error[s] in dates, amounts, volume and page of
record, property descriptions, names of parties and other information, if
considering all the circumstances of record, sufficient data are given to
identify, with reasonable certainty, the mortgage sought to be released."
[Emphasis added]
The comments to Standard 18.4 provide that, normally a mortgage release is
merely a record termination of the security interest. Actual termination
occurred by operation of law as a result of the debt payment. However, payment
of a mortgage debt is a factual issue. A mortgage must be judicially terminated
absent a properly delivered release.
Standard 18.4 provides that, despite the number or types of errors in a
release, if the searcher can determine that a particular mortgage was intended
to be released, the release is sufficient. In essence, substance prevails
over form, allowing the title searcher to report the mortgage as released
despite the errors.
Standard 18.5 follows 18.4 by providing that a release of modified mortgage
which refers to either the mortgage or the modification is deemed sufficient to
release both.
Stewart's underwriting guidelines follow title standards set forth in 18.4
and 18.5.
However, Standard 18.4 does not cure the situation where the person executing
the release of mortgage is not the holder of the mortgage at the time the
release is given. In such a case: (1) you must obtain a new or duplicate release
from the last holder of record; or (2) obtain an assignment from the last holder
of record to the releasing entity; or (3) you must show that the releasing
entity, is, in fact, part of the same entity by merger or acquisition (i.e.-
Norwest and Wells Fargo or NewMil Bank and Webster Bank being one in the same);
or finally (4) the releasing entity is doing so under Power of Attorney
previously recorded.