Assignment of Mortgage by Individual Mortgage Holder
Assignments Generally: Lenders,
or holders of mortgages or deeds of trust, often assign mortgages or deeds
of trust to other lenders, or third parties. When this is done the
assignee (person who received the assignment) steps into the place of the
original lender or assignor. To effectuate an assignment, the general
rules is that the assignment must be in proper written format and recorded
to provide notice of the assignment.
Satisfactions Generally: Once a mortgage
or deed of trust is paid, the holder of the mortgage is required to satisfy
the mortgage or deed of trust of record to show that the mortgage or deed
of trust is no longer a lien on the property. The general rule is that
the satisfaction must be in proper written format and recorded to provide
notice of the satisfaction. If the lender fails to record a satisfaction
within set time limits, the lender may be responsible for damages set by
statute for failure to timely cancel the lien. Depending on your state,
a satisfaction may be called a Satisfaction, Cancellation, or Reconveyance.
Some states still recognize marginal satisfaction but this is slowly being
phased out. A marginal satisfaction is where the holder of the mortgage
physically goes to the recording office and enters a satisfaction on the
face of the the recorded mortgage, which is attested by the clerk.
Alabama Law
Assignment: An assignment of mortgage must
be in writing and recorded. 35-4-51.
Demand to Satisfy: The Mortgagee (holder
of the mortgage) must satisfy the mortgage upon payment and demand from
the mortgagors (borrowers) to satisfy the mortgage. 35-10-26.
Recording Satisfaction: Upon demand, the
Mortgagee "shall file a properly executed and notarized satisfaction of
the mortgage or otherwise cause the mortgage to be satisfied". 35-10-26
Marginal Satisfaction: Marginal satisfaction
is still recognized. 35-10-27.
Penalty: If the mortgagee fails to satisfy
the mortgage within 30 days of demand, the Mortgagee may be liable for
statutory damages of $200.00. 35-10-30.
Acknowledgment: An assignment or satisfaction
must contain a proper Alabama acknowledgment, or other acknowledgment approved
by Statute. 34-4-29.
Alabama Statutes
Section 35-4-51
What instruments admitted to record; filing as notice of contents;
section cumulative.
Except as may be otherwise provided by the Uniform Commercial Code,
all deeds, mortgages, deeds of trust, bills of sale, contracts or
other documents purporting to convey any right, title, easement, or interest
in any real estate or personal property and all assignments of mortgages,
deeds of trust or other securities for debt or extension agreements
with respect thereto, when executed in accordance with law, shall be admitted
to record in the office of the probate judge of any county. Their filing
for registration shall constitute notice of their contents.
This section shall not be construed as superseding or repealing
any other laws effective in Alabama relative to the subject matter in this
article, but shall be held and construed to be cumulative.
Section 35-10-26
Title revested upon payment of debt.
The payment or satisfaction of the real property mortgage debt divests
the title passing by the mortgage. "Payment or satisfaction of the real
property mortgage debt" shall not occur until there is no outstanding indebtedness
or other obligation secured by the mortgage, and no commitment or agreement
by the mortgagee to make advances, incur obligations or otherwise give
value (collectively referred to as "extend value"), under any agreement,
including, without limitation, agreements providing for future advances,
open end, revolving or other lines of credit, or letters of credit. Upon
the written request to satisfy a mortgage signed by the mortgagors
and by all other persons who have a right to require the mortgagee to extend
value or signed by other authorized representatives on behalf of the mortgagors
and such other persons, which notice shall actually be served upon the
mortgagee, and provided there is no outstanding obligation secured by the
mortgage at that time, the mortgagee shall file a properly executed
and notarized satisfaction of the mortgage or otherwise cause the mortgage
to be satisfied in accordance with other applicable provisions of law.
From and after such written request for mortgage satisfaction, neither
the mortgagors nor any other person who signed such request, or on whose
behalf such request was signed, shall have the right to request or demand
that the mortgagee extend value under the mortgage or other agreements
and the mortgagee shall be released from all obligations and commitments
to extend value thereunder.
Section 35-10-27
Entry of full payment or satisfaction in record; Generally.
If a mortgage or deed of trust which is of record has been fully
paid or satisfied, the mortgagee or transferee or assignee of the mortgage,
or trustee or cestui que trust of the deed of trust, who has received payment
or satisfaction, must on request in writing of the mortgagor, or of a creditor
of the mortgagor having a lien or claim on the property mortgaged, or of
a purchaser from the mortgagor, or owner of the lands mortgaged, or a junior
mortgagee, or of the debtor in a deed of trust, enter the fact of payment
or satisfaction on the margin of the record of the mortgage or deed
of trust. Such entry must be witnessed by the judge of probate, or his
clerk, who, in his official capacity, must attest said satisfaction, and
for making such attestation the judge of probate is entitled to a fee of
$25. Or satisfaction may be made by an attorney-in-fact authorized by an
instrument executed and acknowledged as is required of conveyances and
filed for record, which entry need not be attested. Such entry operates
as a release of the mortgage or deed of trust, and is a bar to all actions
thereon.
Section 35-10-30
Penalty.
(a) If, for 30 days after such request, the mortgagee or
assignee or transferee, trustee or cestuique trust, fails to make any entry
required by this article he forfeits to the party making the request
$200.00 unless there is pending, or there is instituted, an action
within that time, in which the fact of partial payment or satisfaction
is or may be contested. In construing this article, the right of action
given herein shall be considered as a personal right, and shall not be
lost or waived by a sale of the property covered by the mortgage or deed
of trust before a demand was made for the satisfaction to be entered upon
the record.
(b) All actions for the recovery of the penalties mentioned in this
article shall be brought in the county where such mortgage or other instrument
is recorded.
