A mortgage is one of the largest financial moves people will make in their lifetimes, and it’s important to understand how the mortgage discharge process works. Through various scenarios, a mortgage discharge ultimately relieves the borrower of payments. However, according to real estate attorney Steve Butcher Sr. in Rochester, NY, this doesn’t always mean you own the home.
Mortgage discharges are essentially a tool banks use to remove borrowers from the property’s title. This can range from good to bad scenarios that include the following:
- Fully Paid Debt: The most common mortgage discharge comes when homeowners have paid their debt in full. Once completed, they and their real estate attorney file documents with the bank or lender to have their name removed from the property’s title. This proves that the home is now outright owned and that no further payments can be requested. The same process needs to be handled when selling a home.
- Refinancing With Third Parties: If a borrower obtains a new loan from a third party to pay off their mortgage, this is also considered a discharge. Since they are completing their loan terms with the initial lender, that debt is closed. The new debt from the third party loan is unrelated, and requires a different filing process with the initial lender; this is best handled by a real estate lawyer.
- Bankruptcy: During Chapter 7 bankruptcy, mortgage debts are forgiven. However, this doesn’t make the borrower a homeowner. Although they have no debt to the lender, the lender can still foreclose on the home in order to make up the money that was lost. This can be circumvented through Chapter 13 bankruptcy, though the mortgage will not be discharged. It’s best to consult with a real estate attorney and bankruptcy lawyer when pursuing these options.
Whether you’re buying or selling, real estate attorney Steve Butcher Sr. offers the knowledge and experience needed to help you get a fair deal. He offers comprehensive legal services that will protect your rights and ensure all transactions are filed and handled correctly. Call (585) 263-2444 to schedule a consultation and visit his website and Facebook to learn more about his practice.