Homeowners can demand a satisfaction and release — and get it through court action.

Posted on August 22, 2022 by Neil Garfield

Hat tip to Ralph, who writes

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Once a Lender has been paid, the Lender has been paid.  My point is that paragraph #23 is black & white…  It’s only that Courts and Nincompoops overthink it that makes it ineffectual.  Read in the spirit of “Pain Language”, it says all that needs to be said.

“23.  Lender’s Obligation to Discharge this Security Instrument.  When Lender has been paid all amounts due under the Note and under the Security Instrument, Lender will discharge this Security Instrument by delivering a certificate stating that this Security Instrument has been satisfied…”

It does not say “When the Maker pays the Lender.”  It says “When the Lender has been paid.”  There doesn’t seem to be a lot of argument that the Lenders’ have been paid…..

The question is: Have the Lenders’ non-Creditor successor’s also been paid?  Because the mortgage language seems pretty clear, somebody needs to pay the Lender, so they can move on and make more loans by recycling the same money on the lending merry-go-round.

It says: the Lender must “discharge” when the Lender has been paid all amounts under the note and under the security instrument…  However, as you 8/16 post cites:

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A mortgage is only an incident to a debt, which is the principal thing. It is merely security for the debt. Where there is no debt–no relation of debtor and creditor–there can be no mortgage.

Consequently, keeping it simple…. Once the note is paid for (by anyone or any entity) “there can be no mortgage”.

My response is that I have been thinking about exactly what Ralph is addressing for years.

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You are not the only one to have thought of this. But the affirmative defense or complaint is not as simple as you might think. Since there was no loan account, there is no proof that the loan account was paid off. I know that sounds ridiculous but on the face of it, that’s what it looks like.

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So the allegations would need to be that the parties received payments over the amount transacted with the homeowner arising out of the issuance of the note and mortgage. However, those payments were not credited to any loan account because no loan account existed. Under the terms of the mortgage, the receipt of payment and not the posting of the payment triggers the requirement for satisfaction and release.
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I think you have identified a strategy whose time has come. The simple question in discovery is whether the loan account exists on the books and records of any creditor. If it doesn’t, the presumption arises that there is no debt.
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If there is no debt on the mortgage is securing nothing.
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In plain language, if there is no debt, then the fact that you signed a promissory note is irrelevant and unenforceable except in some very limited circumstances where a claimant alleges that they are a holder in due course under Article 3 of the UCC.
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But that never happens in the foreclosure arena — although the lawyers for the foreclosure mill always argue as if their “client” (who is not their client and with whom they have no contact or relationship) should be treated as a holder in due course.
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In that event, the mortgage may be declared satisfied and released by the court. That judgment can be recorded. Some people have sought expungement of the mortgage, which requires a much higher burden of proof. I don’t recommend it.

Filed under: foreclosure |

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