Using the Massachusetts Mortgage Discharge Law: The New REBA Forms November 13, 2007 Mandee J. DaCosta, Esq. SKM Title & Closing Services, P.C. 500 Faunce Corner Road Building 100, Suite 190 North Dartmouth, MA 02747

Payoff Request Letter Form 40 Use the payoff request letter routinely when ordering payoffs Often practical problems with getting borrower to sign and return the borrower authorization pre-closing Incorporate a statutory form of borrower authorization into your firms general refinance letter to borrowers or seller letter With home equity lines/lines of credit be sure to include specific language directing the payoff lender to freeze the borrowers account and deny any requests for future advances

Payoff Request Letter Form 40 Educate clients who may be ordering payoffs themselves about the new law Consider a memo to clients explaining the new statute along with detailed instructions on how to fill out the payoff request form Important to use the form at the outset to avoid losing end of month deals due to lack of a needed payoff Lender clients are generally in the best position to get the borrower authorization signed

Payoff Transmittal Discharge Forms Form 41-A, Form 41-B, Form 41-C Efficiency - don’t feel you need to use these forms every time Time involved in preparing the affidavit, separate notice forms and then having them reviewed and signed by an attorney Possible delays in payoff transmittal Consider a streamline version of the demand form to accompany the payoff Perhaps only send complete demand and notice to discharge by affidavit to “problem” payoff lenders or mortgage servicers You can always follow up with “Missing Discharge” form group under M.G.L. ch. 183 § 55(g)(1) if you do not get the discharge or a recorded copy within 45 days of payoff

Payoff Transmittal Discharge Forms Short Payoff Issues What happens when you disburse the proceeds of the transaction and send in the payoff and relevant discharge demand forms and you then get a notice from the payoff is short? Prior to the new statute, short payoffs were a costly problem for many residential conveyancers Hard to track down un-cooperative borrowers or sellers who may not be able to be located The statute provides the payoff lender recourse directly against the borrower/seller while the payoff lender remains obligated to issue the discharge Consider a standard notice to payoff lender detailing payoff lenders obligation to discharge Create an internal tracking system to address files with short payoffs

Existing Discharge with Technical Problems Form 42 Proof of execution of an unacknowledged discharge can be proven by evidence in the form of documents or affidavits which, if not in otherwise recordable form, may be attached to an affidavit under M.G.L. ch. 183 §5B Proof of execution of an unacknowledged discharge can also be proven by statutory procedures under M.G.L. ch. 183 §§34-41

Existing Discharge with Missing Assignment and Authority Documents Form 43-A, Form 43-B, Form 43-C, Form 43-D When using these forms you generally have a discharge on record but there is a missing assignment or authority document Title clearing wise these situations are often the most frustrating Keep in mind that if you don’t have success getting the supporting document(s) you need, you can sometimes look to the “Missing Discharges” grouping of §55(g) forms if your office transmitted the payoff and has evidence of payoff, or you can work with a prior closing attorney who transmitted a payoff and has evidence of payoff

Discharge by Recording Paid Note Form 44 In addition to the provisions and forms under M.G.L. ch. 183 §54 and 54C, a mortgage on a 1-4 family residential property may also be discharged by recording the original note secured by the mortgage, if the note is marked “paid” by the holder as evidenced by the endorsements on the note This is a great way to fix pre-closing issues where the home owner may have never received the discharge, but they did receive the paid in full note back from the mortgagee Generally, the note itself is not notarized or otherwise in recordable form, so you need to use Form 44 which is a specific form of the standard M.G.L. 183 §5B affidavit

Demand on Prior Closing Attorney Form 45 The closing attorney has a responsibility to record a proper discharge he/she actually received, within 45 days of receipt or face potential liability for damages under the statute Some may choose to send Form 45 simply as a method to inquire if a prior closing attorney actually received the discharge If the prior closing attorney did not receive the discharge the form simply instructs them to notify the party making the inquiry that they did not receive it forthwith As the statute allows a prior closing attorney who did receive but did not record a discharge 30 days to record the discharge with out facing any penalty, this form can be useful to establish a 30 day time line for resolution of discharges issues where the prior closing attorney in fact received the discharge If the prior attorney never received the discharge, use the grouping of forms under M.G.L. ch. 183 §55(g) to work together with prior closing attorney who does not have discharge but in most cases has other documentary evidence of payoff

Missing Discharges Form 46-A, Form 46-B, Form 46-C, Form 46-D, Form 46-E, Form 46-F This grouping of forms can also be used for existing discharges with missing assignment and authority problems If you do not have success getting the supporting documentation you need under using the grouping of forms relative to M.G.L. ch. 183 §54C ask “do I have other evidence of payoff” If you feel it is more efficient to initially transmit a streamlined discharge demand letter with the payoff and you don’t get a discharge this is generally the grouping of forms you would follow up with

Missing Discharges Form 46-A, Form 46-B, Form 46-C, Form 46-D, Form 46-E, Form 46-F Also, keep in mind that you can use these forms not only in situations where your office actually transmitted the payoff, but also while working with a prior closing attorney who never received a discharge but has other documentary evidence of payoff The ability to send the demand notice and corresponding discharge by affidavit also applies to private mortgages This provides new relief as previous versions of the statute had limitations to apply only to federally related mortgages

Demand for Un-reimbursed Recording Fee(s) Form 47 Generally this is the final form to consider once you have done all the work and have actually received the missing discharge Provides a remedy against a mortgagee, mortgage servicer, or note holder who withheld the recording fee for the discharge, but failed to record the discharge Within within 30 days after receipt of a written demand the mortgagee, mortgage servicer or note holder must either 1. return or credit the mortgagor the withheld fee together with 6% interest, or 2. face liability to the mortgagor for the greater of a. the fees charged to or withheld from the mortgagor and not refunded or credited, with interest thereon, plus $2,500.00, or b. the mortgagor’s actual damages c. together with reasonable attorneys fees and costs, in addition to all other remedies available at law

Obsolete Mortgages - M.G.L. ch. 260 § 33 Effective October 1, 2007 A mortgage with no stated maturity date expires 35 years from the date of recording of the mortgage A mortgage with a stated term or maturity date expires 5 years from the expiration of the term or from the maturity date When dealing with RECORDED LAND no further action is necessary and the mortgage is automatically expired When dealing with REGISTERED LAND upon the payment of the fee for recording ($75.00) the mortgage shall be marked discharged on the relevant memorandum of encumbrances Land Court has a new form entitled “Request for a Discharge Notation Pursuant to M.G.L. ch. 260 § 33” available on the Land Court website

Tips on Using the New REBA Forms Think of the form groupings merely as guides Most of the groupings can be used to help resolve pre-closing as well as post-closing title issues You will often find there may be more than one way to fix your given problem The forms are simply additional tools available for use. It is not necessary to use them every time Depending on the situation it is ok to continue to rely on previous methods used to clear title. Is is a matter of a simple phone call? Find a way to use the forms in an efficient manner that gets results for your practice