Using the Massachusetts Mortgage Discharge Law: The New REBA Forms

1. 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

2. 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

4. 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

8. 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

11. 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

16. 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

17. 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

26. 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

27. 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

28. 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

29. 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