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When Your Mortgage Company Folds

What do you do when your mortgage company folds but forgets to do their homework?

It's a great question for a Boston real estate lawyer.

Let's get a bit more specific. We're talking about the situation where the homeowners have paid off their mortgage, but the lender forgot to remove the lien on the property.

When you get a mortgage on a house, the mortgage note is presumably secured by the house itself. This usually means that the lender has some interest, otherwise known as ownership, in your house.

The difference arises in a state that employs the title theory versus the lien theory. In Massachusetts, the way a mortgage lender would secure their loan would be under the title theory, where the lender would execute a deed of trust on the property.  

Usually, what happens is that the mortgage company must file this "ownership interest" with the county recorder. As such, it shows up on your title deed.

Now, when you've paid off your mortgage, the mortgage company should issue something called a "notice of release of lien" or a "deed of reconveyance."  In Massachusetts, it would be the latter.

In light of the recent mortgage crisis, it's quite possible that a mortgage company could forget to do their homework. At least that's the case outlined on

So, what do you do if you've paid off your mortgage but can't remove the cloud on your title?

The state of Massachusetts is unique, when it comes to real estate. Property ownership is indexed a little differently here. As such, a MA real estate attorney would likely know exactly what to do and how to handle the situation. Chances are that you would need to track down the company that took over the book of business from your old mortgage company. But it's probably not wise to go about this alone.

Contact a MA real estate lawyer to guide you through the process.

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