Can lenders sue after satisfaction of mortgage?

Answer 1

Read your Satisfaction of Mortgage carefully. The wording and the document used can vary, depending on the lender and the jurisdiction. The satisfaction or discharge of the mortgage should state that the mortgage has been satisfied. In some cases the note is mentioned also. A satisfaction of the mortgage removes the encumbrance of the mortgage from the subject property. If the mortgage was effectively satisfied and was not recorded in error, the lender would have no reason to sue.

In some cases where the mortgage is discharged the notemay not be discharged and will remain as indebtedness against the borrower but not as an encumbrance on the real estate.

If the satisfaction was recorded in error the bank would need to take the matter before a judge to request a court order to reinstate the mortgage. However, courts do not always help a lender when it has made that kind of mistake. The statute of limitations and rules regarding that type of action vary in different jurisdictions. You need to consult an attorney who is familiar with the laws in your jurisdiction.

Also, a problem has developed in the mortgage/foreclosure related industry whereby entities who have no interest in a mortgage are executing bogus discharges for a fee, convincing unsuspecting consumers that the lender's title is insufficient and the lender will need to take the matter to court in order to defend their ownership of the mortgage. Of course, those discharges are worthless.

If you are uncertain about your mortgage discharge then you should consult with an attorney who specializes in real estate law in your jurisdiction.