Mortgage Note in Hand post payoff Question.

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SimonJester
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Joined: Tue Aug 16, 2011 12:39 pm

Mortgage Note in Hand post payoff Question.

Post by SimonJester »

After paying off my mortgage the servicer filed the proper release with my county and sent me a letter stating my mortgage was now paid off. I decided I wanted to try and get my original note back as extra security, so I called up the bank and requested the note be returned. They agreed and said it would be sent out right away.

A few weeks went by and I started to think I was blown off so I decided to send a qualified written request under RESPA to the bank asking them to return the note. I wasn't even sure RESPA would still apply after the mortgage was paid but the worse I would be out was postage for the certified letter. This time I received a written reply they would look into my issue and get back with me.

A few more weeks passed and much to my surprise I received a package in the mail from the mortgage servicer. My original note and the deed of trust both marked paid.

So my question is what now? Do you hang onto this note forever or destroy it? My inclination is to hang onto them forever...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
sscritic
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Joined: Thu Sep 06, 2007 8:36 am

Re: Mortgage Note in Hand post payoff Question.

Post by sscritic »

Why would you destroy the evidence that you own your home? File it. I still have mine from two and three houses ago. If the bank ever wants to claim I didn't pay, I have the reconveyance (what is used in my state).
dailybagel
Posts: 497
Joined: Tue Feb 15, 2011 8:35 pm

Re: Mortgage Note in Hand post payoff Question.

Post by dailybagel »

Sure, hold on to these. In the very rare event that your bank (or the putative purchaser of your mortgage) has questions, you'll have the paperwork.

The much more likely scenario is that you show it to young children/grandchildren if they ask whether you own your home, or when you bought it, etc.
bogleviewer
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Re: Mortgage Note in Hand post payoff Question.

Post by bogleviewer »

Is there some type of law stating that they have to return it to you?

What if they would have refused?
BYUvol
Posts: 120
Joined: Sat Mar 24, 2012 3:06 pm
Location: KY

Re: Mortgage Note in Hand post payoff Question.

Post by BYUvol »

The instrument that matters is the one in your county's public records. Because our land records system has been in existence since before the postal service, most states have some rather "magical" statutes. For instance, when a document is recorded with the county, the "original" document is no longer the one with the wet signature, but rather what has the official county recording label placed upon it (which may or may not be the one with the wet signature). If there is a question down the road, you can always request a copy from the county recorder/register of deeds, no need to hold on to it. You physically holding a copy doesn't provide you with any additional protections.
Topic Author
SimonJester
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Re: Mortgage Note in Hand post payoff Question.

Post by SimonJester »

bogleviewer wrote:Is there some type of law stating that they have to return it to you?
What if they would have refused?
No I could find no law requiring them to return the note upon payoff. So I decided to request the note back and see what the bank would do.

BYUvol wrote:The instrument that matters is the one in your county's public records. Because our land records system has been in existence since before the postal service, most states have some rather "magical" statutes. For instance, when a document is recorded with the county, the "original" document is no longer the one with the wet signature, but rather what has the official county recording label placed upon it (which may or may not be the one with the wet signature). If there is a question down the road, you can always request a copy from the county recorder/register of deeds, no need to hold on to it. You physically holding a copy doesn't provide you with any additional protections.

While this is true for the deed of trust, the original note is not recorded; in fast it is a negotiable instrument.
So while the chances are small, the bank could sell the note after I paid it off years later to someone who in turn could show up and demand payment. It would be a worthless note but I might end up needing to prove in court that I did indeed pay off the loan. So by asking for it back I gain some small piece of security at the cost of a letter and postage...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
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Kenkat
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Re: Mortgage Note in Hand post payoff Question.

Post by Kenkat »

BYUvol wrote:The instrument that matters is the one in your county's public records. Because our land records system has been in existence since before the postal service, most states have some rather "magical" statutes. For instance, when a document is recorded with the county, the "original" document is no longer the one with the wet signature, but rather what has the official county recording label placed upon it (which may or may not be the one with the wet signature). If there is a question down the road, you can always request a copy from the county recorder/register of deeds, no need to hold on to it. You physically holding a copy doesn't provide you with any additional protections.
I mostly agree but sometimes the county courthouse burns to the ground or floods or gets hit by a tornado and the official records are lost. An unlikely event especially in these days of computer imaging and offsite storage, but it does still happen. Can't hurt to have some proof of your own.
scone
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Re: Mortgage Note in Hand post payoff Question.

Post by scone »

I would put these papers, and stuff like your marriage license and passport, in a safe deposit box. Preferably in the next county, at least. Disasters happen, and this is cheap insurance. BTW, this is why old-fashioned banks were commonly built of stone, with fire-proof vaults.
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
BYUvol
Posts: 120
Joined: Sat Mar 24, 2012 3:06 pm
Location: KY

Re: Mortgage Note in Hand post payoff Question.

Post by BYUvol »

SimonJester wrote:
BYUvol wrote:The instrument that matters is the one in your county's public records. Because our land records system has been in existence since before the postal service, most states have some rather "magical" statutes. For instance, when a document is recorded with the county, the "original" document is no longer the one with the wet signature, but rather what has the official county recording label placed upon it (which may or may not be the one with the wet signature). If there is a question down the road, you can always request a copy from the county recorder/register of deeds, no need to hold on to it. You physically holding a copy doesn't provide you with any additional protections.

While this is true for the deed of trust, the original note is not recorded; in fast it is a negotiable instrument.
So while the chances are small, the bank could sell the note after I paid it off years later to someone who in turn could show up and demand payment. It would be a worthless note but I might end up needing to prove in court that I did indeed pay off the loan. So by asking for it back I gain some small piece of security at the cost of a letter and postage...
As you said, it would be worthless. Burden of proof is on the lender, particularly in the wake of all the "robosigning" lawsuits, judges are siding with homeowners without proper documentation from lenders. Statutes can vary wildly between states, and to an extent even between counties, but universally, without documents being properly recorded, they are unenforceable. If a note is sold, there must be a substitution of trustee filed for the new note holder to be able to claim payment. If there is a satisfaction or release (depending on state) previously filed, then any substitution recorded subsequently would be ignored in the chain of title. The real security then comes from the release or satisfaction, not the original note.
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