Documents to retain after paying off mortgage (insurance, loan, escrow)

[hStack]

So I finished my mortgage off in June of 2013, but hold off in getting all the documents squared off till today. I've been googling the past couple of hours on what to expect after I paid off the mortgage. I got the original promissory note back from the lender and it's stamped "Paid in Full". I did a document search in Travis County Clerk website and found a scanned copy of the "Release of Lien" from the mortgage company. I also found a scanned copy of the "Deed of Trust", and it looks the title company that handled the closing when I bought the property 16 years ago is keeping the original "Deed of Trust" copy.

My 1st question is am I supposed to receive the original "Deed of Trust" from the title company now that the "Release of Lien" has been recorded by the county clerk. Some website I read mentioned that I'm supposed to obtain the original copy of the "Deed of Trust", while other website mentioned that as long the "Release of Lien" is recorded by the county then the mortgage company has relinquish it's hold on the property.

My 2nd question is that from what I gather there is no official property title document that grants me legal ownership of my property, unlike owning a car. Just want to confirm this is true for state of TX.

Richard

[IC_deLight]

Out of curiosity, was this a constitutional home equity loan or a non-home equity loan?

Folks may be unaware that the Texas Constitution requires the return of the original note for home equity loans. Failure to do so can be costly for the lender or holder. Tex. Const. Art. XVI Sec. 50(a)(6)(Q)(vii) provides that the loan

(Q) is made on the condition that:
•••
(vii) within a reasonable time after termination and full payment of the extension of credit, the lender cancel and return the promissory note to the owner of the homestead and give the owner, in recordable form, a release of the lien securing the extension of credit or a copy of an endorsement and assignment of the lien to a lender that is refinancing the extension of credit;

If the homeowner notifies the lender of the failure to fulfill the terms of the extension of credit and the lender fails to cure within 60 days, then the homeowner is entitled to forfeiture of all principal and interest. Since the loan is already paid off and since some courts have limited recovery to 4 years, the recovery might be limited to amounts paid within 4 years of filing suit.

In any event, you should keep
the closing documents from the original purchase transaction;
any documents relating to loan modification or re-finance;
the signed original note;
the release if you receive an unrecorded release (but you will record it)

Most folks never receive the signed original note back.

You do not need the "original" deed of trust ("DOT"). Without a debt it has no effect and your possession of the original doesn't change anything. You also don't need to worry about someone else having the original deed of trust. It is not a negotiable instrument so possession of the original deed of trust really means nothing to anyone except the lien holder and even then only if it hasn't yet been recorded. If you need to get a certified copy, you can always obtained one from the county clerk (the DOT was recorded - if it wasn't then the only person at risk was the lender and its successors or assignees, not you)

The release is an express release of the DOT. If the release was recorded you need not worry about getting the original release back either. For home equity loans, the lender is only required to provide you with a release in recordable form - the lender is not required to record a release. If you receive an original release and it has not been recorded you would be wise to record it to facilitate future transfer of the property. If you do get an original back you might as well archive it with the other documents (after recording if it hasn't been recorded).

Congratulations on the accomplishment in getting this lien released.

Hopefully the property is not condo or HOA property. There's not much worse than "owning" property saddled by perpetual liens that can never be paid off. If this is condo/HOA property you are now a target for HOA attorneys and management companies because of the large amount of equity in your house. If you're in an HOA/condo then celebrate your achievement on CD, not publicly around the development.

Regarding your second question, there IS a document indicating ownership of the property. That document is the deed conveying the property to you at the time of the original closing. That deed is still valid. You don't need the original deed if it was recorded (and we're pretty sure it was or else the DOT would have been ineffective. You can only grant a security interest in the property if you own the property.) Real property is not conveyed by signing and physically transferring a state-issued title as might occur with a car.

[hStack]

Thanks for the long reply and explanation. You just confirmed what I've been researching that as long as the "Release of Lien" is recorded at the County, then there is no need to get the original DOT back.

I bought the house (not a condo/HOA property) in 1998 and had two mortgages with 80/10 split. The secondary 10 year fixed mortgage was paid off early in 2006 and a release of lien was recorded at that time. Though I completely forgot about this. The primary 30 year fixed mortgage I paid off last year. For both mortgages, both the original promissory notes were returned to me with "Paid In Full" stamp. And the releases of lien were recorded too at the county. So all the documents are accounted for.

For the second question, I was able to download the "Warranty Deed" from the county clerk website that was executed when I closed on the property. From what I gather this is a guaranty from the previous owner that sold me the property that no encumbrance is attached to the property from their time of ownership. A title insurance from a title company (which I do have) is still valuable with regards to liens exposed in the title search from all the previous owners.

At this point, everything is in order. Thanks for sharing your knowledge on this subject.

Richard

[IC_deLight]

Originally Posted by hStack

For the second question, I was able to download the "Warranty Deed" from the county clerk website that was executed when I closed on the property. From what I gather this is a guaranty from the previous owner that sold me the property that no encumbrance is attached to the property from their time of ownership. A title insurance from a title company (which I do have) is still valuable with regards to liens exposed in the title search from all the previous owners.

The warranty deed is the conveyance to you from the prior owner. When title was conveyed, the seller also warranted the title. The title insurance protects you in that you don't need to rely upon the seller's representations.

Unless they were excepted at the time the policy issued, the title policy protect you against unrecorded liens, leases, etc. that may have existed prior to the conveyance date; errors in deeds; failure to find a lien that was actually recorded; fraud/forgery in the warranty deed or other documents from which your title is derived.

[hStack]

Thanks again for explaining the difference between the seller's Warranty Deed and the title company's insurance policy. I have both, though I forgot all about these in the 16 years in between. A website recommended a title search on my own after I paid off the mortgage. But since the warranty deed and title insurance guaranty a valid unencumbered title when I bought the house, and the mortgage lien releases was filed in the county clerk last year, and no other lien has been applied that I'm aware. I don't see a value in the title search.

[rayn2075]

My mother received a DOT stamped PAID IN FULL. Does this mean her house is paid off? She has been paying for over 30 years now and it was sold to numerous lenders throughout the years. There is no way she can still be paying on a home over 30 years when the term was for 30 years. Can someone pleas shed some light on this for me?

[nadia2]

We will be paying off our First Mortgage. We have a second Mortgage with a balance of 35,000 left. Does the deed and escrow transfer over to the second Mortgage?

[nadia2]

We going to be paying off our first mortgage. We have a second mortgage balance of 35,000. Will the deed and escrow account transfer over to the second mortage?

[MikeJaquish]

Originally Posted by nadia2

We going to be paying off our first mortgage. We have a second mortgage balance of 35,000. Will the deed and escrow account transfer over to the second mortage?

No.
Confirm with your lender(s).

[IC_deLight]

Originally Posted by nadia2

We will be paying off our First Mortgage. We have a second Mortgage with a balance of 35,000 left. Does the deed and escrow transfer over to the second Mortgage?

I'm assuming you are talking about your home and that you have a first and a second lien/mortgage.

The use of these terms in your questions suggests some confusion as to what they are. The deed is a document evidencing title. For this example, you had to have title in order to grant a security interest in your property for a first and a second lien. Title will not change. Your deed will not change. There is no reason to transfer your deed either since there is not a conveyance of title to the property involved in any of this.

The security interest in your property is evidenced by a deed of trust (99% of the time in Texas). There is a deed of trust for the first and a deed of trust for the second.

When you pay the first off you should receive a release of the first lien/deed of trust. You need to ensure this is recorded. This does not change title - it removes an encumbrance from your title and evidences release/payoff of a loan. If there is any escrow remaining it should be returned to you.


As to whether the mortgage servicer for the second loan will require an escrow, that will be up to the servicer handling the second loan.