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A deed of reconveyance indicates that you’ve fully on your home, representing the transfer of ownership from your mortgage lender to you. Over the time you repaid your mortgage, you legally owned the property, but the lender held the , or claim, to it. Now that you’ve paid back the loan, the lender needs to remove the lien, and to do that, it’ll issue the deed of reconveyance. “This document is called a or deed of reconveyance depending on the state,” says Megan Hernandez, director of marketing and public relations at the American Land Title Association. In California, it’s called a full reconveyance form, which is signed by the lender and notarized by a public official. How a deed of reconveyance works
State laws generally require a mortgage lender to submit the deed of reconveyance documentation to the county recorder or borrower within a certain time frame after payoff — typically 30 or 60 days, says Hernandez. In some states, the lender sends you the notice directly, and you handle dealing with the county to record it. “If they don’t do this, they can face a penalty,” says Hernandez. If you’re but haven’t paid off your mortgage yet, a deed of reconveyance still plays a role in the final stage of the : The money from the buyer pays off the rest of the loan, which then triggers issuance of the deed. In this case, the typically handles recording it. “During the lead-up to closing, the title company will reach out to your lender and ask for a payoff statement reflecting everything owed up to the day of closing,” says Hernandez. “At closing, the title company will send the payoff to your lender and proof of that payment to your buyer’s lender.” What information is included in a deed of reconveyance
The deed of reconveyance typically includes: The name and address of the homeowner/mortgage borrower The name of the lender/trustee A legal description of the property and parcel number based on the original deed Proof that the borrower has fulfilled their obligation to the lender and the property that had been secured by the home loan now belongs to the borrower Signatures of the parties involved and a notary stamp Why do you need a deed of reconveyance
When you sell your home, the reconveyance deed or satisfaction of mortgage documentation is evidence that the property has a , meaning it’s free from any outstanding mortgages or other liens or claims. Without this, you could have a harder time selling, because a buyer is going to want evidence that the title is free and clear. If you aren’t planning to sell, though, a deed of reconveyance is still necessary — it’s proof that you’ve paid off your mortgage, and that prevents a lender from making a claim to the property. Note that if you have a reconveyance deed, you still have financial obligations as a homeowner, most notably your property taxes. What happens if a deed of reconveyance isn t recorded
If the deed of reconveyance hasn’t been recorded, don’t panic just yet. “The act of paying off all the money owed is what actually extinguishes the mortgage,” says Hernandez. “The recording of the satisfaction is just evidence of the payoff. If a consumer has documentation showing they paid off their mortgage, they don’t need to worry that some lender will come after them.” If you’re concerned about obtaining the deed of reconveyance, ask your lender about how it handles the loan payoff and deed recording process. Remember that lenders have an incentive to make sure they take care of the deed details, since they can be penalized if the process isn’t handled according to state guidelines. SHARE: Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Casey Fleming is an expert who helps clients understand how the mortgage industry and loan products work, and how to get the best mortgage for their specific needs. Related Articles