Transcript releases & partial releases of deeds of trust

RELEASES &
PARTIAL RELEASES OF
DEEDS OF TRUST
Presented by
Carol Snyder
Adams County Public Trustee
for
QUADRENNIAL TRAINING 2011
38-39-101 et seq. C.R.S.
• The statutory provisions related to releasing Deeds of
Trust are in Title 38, Article 39 of the Colorado Revised
Statutes (CRS).
• Any deed of trust that names any person other than the
Public Trustee (PT) as “trustee” or that secures an
obligation other than an evidence of debt (EOD) shall be
deemed a MORTGAGE and foreclosed as a mortgage
(through the courts).
• Except any deed of trust that names a PT as “trustee”
and secures an obligation other than an instrument
evidencing a debt SHALL BE RELEASED as set forth in 3839-102(5).
DEFINITIONS
• Assuming Party – the person or entity that has officially assumed
responsibility for payment of the loan – usually by an Assumption
Agreement or similar documentation
• Current Address of Original Grantor – If the borrower (grantor)
has MOVED and the holder (lender) has a current address for that
party it is to be provided or a check box is provided to indicate the
current address is unknown
• Current Owner – the original borrower may have sold or
transferred title to the property without doing a formal
Assumption of the loan – the current owner is the person/entity
currently holding title/ownership of the property even though the
DOT may have been signed by the previous owner of the property.
NOTE: Request for Release form will show ORIGINAL borrower name(s)
even if someone else currently owns the property and is asking for the
Release – the lien needs to come off the Clerk’s records the same way it
went onto the Clerk’s records
DEFINITIONS
• Certified Copy – a copy of a recorded document
certified to be true and correct by the Clerk & Recorder
of the County where the document was recorded
• Corporate Surety Bond – a bond issued by a person
authorized to issue bonds in COLORADO with the PT as
obligee conditioned against the delivery of an original
evidence of debt to the damage of the PT
• Deed of Trust (DOT) – does NOT convey title to real
property but is a lien on real property to secure
payment of an indebtedness and contains a grant of
the property to the Public Trustee for the benefit of the
Holder, and grants to the PT a power of sale (which
allows PT foreclosures)
DEFINITIONS
• Evidence of Debt (EOD) – a writing that evidences a
promise to pay or a right to payment of a monetary
obligation – promissory note, loan, credit or similar
agreement or a monetary court judgment
• HOLDER of an EOD – means the person:
– In actual possession of, or
– Entitled to enforce an EOD
EXCEPT “holder” does NOT include a person acting as
a nominee solely for the purpose of holding the EOD
or DOT as an electronic registry without any
authority to enforce the debt (Mortgage Electronic
Registration Systems – MERS)
DEFINITIONS
— Presumed to be the HOLDER: (a) person who is the
obligee of EOD and is in possession of an ORIGINAL
EOD,
(b) person in possession of original EOD with proper
indorsement or assignment to such person (assignment
does NOT need to be recorded per Colorado law),
(c) person in possession of negotiable instrument
evidencing a debt, which has been duly negotiated to
such person or to bearer or indorsed in blank; or
(d) person in possession of an EOD with authority to
enforce EOD (authority may be granted by original EOD
or DOT) as agent, nominee, trustee or similar capacity
for the obligee of the EOD.
DEFINITIONS
• Person – any individual, corporation, government or
governmental subdivision or agency, business trust, estate,
trust, LLC, partnership, association or other legal entity.
• Qualified Holder – holder of EOD that is ALSO one of the
following (see 38-38-100.3(20)):
(a) a bank
(b) an industrial bank
(c) a federally chartered savings & loan doing business
in Colorado, or a state -chartered savings & loan
association per Title 11, Articles 40 – 46 CRS
(d) a supervised lender licensed to make supervised
loans, AND that is either:
DEFINITIONS
(I)a public entity that has issued voting
securities listed on a national security exchange
registered under the Securities Exchange Act, or
(II) an entity whose all outstanding voting
securities are held, directly or indirectly, by a public
entity
(e) an entity in which ALL outstanding voting
securities are held by a public entity that also owns all
of the voting securities of a supervised lender, licensed
to make supervised loans
(f) an FHA approved mortgagee
DEFINITIONS
(g) a federal or state chartered credit union doing
business in Colorado
(h) an agency or department of the federal
government
(i) an entity created or sponsored by the federal or
state government that originates, insures, guarantees
or purchases loans, or a person acting on behalf of such
entity to enforce an EOD or the DOT, or
(j) an entity listed in (a) to (i) above, acting as agent,
nominee or trustee for another person EXCEPT as set
forth in subsection (10) of this section.
REQUIREMENTS FOR RELEASE OR PARTIAL
RELEASE OF A DEED OF TRUST
• WRITTEN, duly executed and acknowledged request from the HOLDER
of the EOD, holder’s agent or attorney, or a title insurance company
providing an indemnification agreement and affidavit
• Production of the ORIGINAL EOD (except if Qualified Holder or title
company or if original EOD is lost a Surety Bond)
• Receipt of the PT fee ($15) and recording fees ($11 for 1st page PLUS $5
per additional page)
• Receipt of a current address of original grantor, assuming party or
current owner (or notice that they have no such current address) – PT
discretion to release without current address information
• Original recorded DOT or a legible copy (copy of AT LEAST pages
showing Clerk’s stamp of recording information, names of lender and
borrowers, and signature pages of DOT)
REQUESTS FOR RELEASES BY “QUALIFIED
HOLDERS” and TITLE COMPANIES
• 38-39-102(3) allows Qualified Holders to request
Releases without production of the original EOD
because they provide indemnities to the PT
• 38-39-102(3)(c) allows Colorado licensed title
insurance companies to request a Release without
production of the original EOD – they are deemed to
have agreed to indemnify and defend PT against
damage claims for processing the Release. Affidavit
(in standard form) MUST be provided by title
insurance company.
REQUESTS FOR RELEASES BY ANYONE WHO IS
NOT A QUALIFIED HOLDER OR TITLE
INSURANCE COMPANY
• Anyone NOT a Qualified Holder or title insurance company
requesting a Release without production of the original EOD
must provide to the PT a corporate Surety Bond in an amount 1.5
times the ORIGINAL principal balance recited in the DOT.
• Bond shall be effective for 6 years from date of recording of
Release, or other time period required by Colorado statutes of
limitations, whichever is less, OR
• Until such time as any claim made against the PT within such time
period is resolved, whichever is longer.
• Surety Bond is retained by PT in safekeeping in event it is needed.
• PT fees must include fees for recording BOND as well as the
Release of DOT
PT May Request “Evidence” of Current Holder
• You MAY request evidence satisfactory to you that the
person/entity signing the Request for Release of Deed of Trust is
the CURRENT HOLDER of the EOD.
• “Evidence” might be copies of the indorsements, assignments or
allonges to the EOD or might be a servicing agreement that allows
the servicer to enforce the EOD and to release it
• An “agent” or “nominee” is usually NOT the current HOLDER of
the EOD
• MERS is usually NOT the current HOLDER of the EOD unless the
EOD is actually payable to MERS
• CONSULT WITH YOUR COUNTY ATTORNEY (if knowledgeable and
available) or HIRE AN ATTORNEY (the PTAC attorney Rich Krohn
will work for individual PTs but YOU will be obligated to pay him)
to ask legal questions!
FORMS
• Forms for full and partial Releases are on the PT Association’s
website and on many county PT websites – these forms are set forth
in Colorado Statutes (38-39-107 and 38-39-108)
• Forms received for Releases “may be in substantially the … form” set
forth in law, but do NOT have to be exactly as shown in CRS
• One form (without production of original EOD) is for use by
QUALIFIED HOLDERS or title companies or by anyone else with
production of a Surety Bond (Adams County RECORDS the Surety
Bond as a separate document returned to US after recordation;
REMEMBER to collect recording fees for the Surety Bond)
• The other form is for use by ANYONE (with production of original
EOD) – HOWEVER, we do not routinely reject a Request for Release
on the WRONG “with production” form but we NOTE on the face of
it that a Surety Bond was provided in lieu of the original EOD if that’s
the case
•
REVIEW OF FORMS & DOCUMENTS
• Check DOT first to make sure it is “granted or conveyed” to PT
and that property is located in YOUR county
• IF property is NOT located in YOUR county but DOT was
recorded in your county IN ERROR, you may process the Release
but notify submitter that it should ALSO be released and
recorded in the county where the property is located
• IF property IS located in YOUR county but DOT was recorded in
another county IN ERROR, you should process the Release and
notify submitter that it should also be released and recorded in
the county where it was recorded in error
• If NO LEGAL DESCRIPTION is provided on Request for Release
form, it is “deemed to be a FULL Release” even if the “Partial”
box is checked on the form. If it is to be a PARTIAL RELEASE,
must have legal shown on form or in an attachment (exhibit).
REVIEW OF FORMS & DOCUMENTS
• PT is to examine Request for Release and presented
documents to assure information is correct – names,
dates, recording information and, if a Partial Release,
that legal description appears to be some portion of
the total property encumbered by the DOT – same
subdivision or Township/Section/Range
• Appropriate box on form should be checked on
Request for Release WITHOUT production of EOD to
indicate whether a Qualified Holder or Title Insurance
Company is submitting the Request or if Surety Bond is
submitted.
Affidavit of Discrepancy
• Some PTs accept a notarized Affidavit of
Discrepancy from the submitter if there are
“minor differences” between the EOD and the
DOT relating to:
– Dates
– Amounts
– Misspelled names (transposed letters) but NOT
completely different names
NOTE: The Affidavit of Discrepancy could be an
exhibit to the Request for Release or it could be
recorded as a separate document (PT preference)
REVIEW OF FORMS & DOCUMENTS
• Be SURE you have an address for return of Release (once it is
recorded by Clerk) and for return of other submitted
documents (note and DOT). If unknown or not indicated on
Request form, send back to submitter – MOST submitters
provide a self-addressed postage paid envelope for document
returns
• If one of the “joint tenant” holders is DECEASED, the death
certificate of that holder may be provided to PT – on Request
for Release form (on or near signature line for holder) mark
“death certificate exhibited”.
• If one of the “tenants in common” holders is DECEASED, you
may need Letters Testamentary for that decedent’s estate to
show WHO can sign on decedent’s behalf, or a Small Estate
Affidavit may show who can sign on decedent’s behalf
REJECTIONS
• PT should reject Request for Release if ALL
required documents and accurate fees are not
submitted
• PT should reject Request for Release if
information on submission is NOT accurate
and complete – PT may make minor
corrections, such as an omitted middle initial
shown on original DOT may be interlineated
by PT in Request for Release in order to
expedite Release and not reject for a minor
error
TRACKING PROCESSED RELEASES
• It is suggested that you keep a daily or weekly
spreadsheet (or some other means) to track the
Releases you have processed and sent to the Clerk’s
office for recording. If a customer calls you can locate
the borrower’s or submitter’s name on your
spreadsheet and let them know WHEN you processed
the Release and sent it for recording.
• That may give the customer an idea of when the release
of DOT may be recorded, the lien released and when
they may expect to receive the original, recorded
Release of DOT in the mail.
REJECTION FORM/LETTER
• PT should reject and RETURN ENTIRE PACKAGE to
submitter if there are problems
• Include a form or letter indicating WHAT ALL OF THE
PROBLEMS ARE so that submitter can remedy them for
re-submission
• Keep a copy of the reject form/letter with
grantor/borrower’s name on it so you can respond to
phone calls or questions as to why Release hasn’t been
processed
• Use reject form/letter to expedite processing of
Release upon re-submission – what was wrong and has
it been remedied?
FEE ALLOCATION & RECORDING
• PT deposits ENTIRE payment into PT account
• PT retains $15 fee for processing Release
• PT transmits Release to Clerk and Recorder for
recordation; many Clerks send recorded
Releases directly to the person shown on the
form, others return recorded Releases to PT
• PT pays Clerk and Recorder appropriate
Release recording fees:
– $11.00 for one page
– $5.00 for each additional page
IMPORTANCE OF TIMELY PROCESSING OF
RELEASES OF DEEDS OF TRUST
• Many homeowners are WAITING for release of one DOT in
order to refinance property with a new loan
• Colorado law says a Release must be processed by the
Holder and recorded within 90 days after payment of the
debt is made (CRS 38-35-124) so long as debtor pays
appropriate fees for such Release – MANY Holders do NOT
request releases in a timely manner – PT may get calls from
borrowers asking WHY release hasn’t been done but PT has
never received a Request for Release from the Holder – PT
should refer borrower back to Holder
• Homeowners want to KNOW the lien on their property has
been released!
CAUTIONS!
• Powers of Attorney (POA) – someone attempting to
execute a Request for Release of DOT acting for the
Holder under a Power of Attorney. The POA may NOT
give them the authority to release a DOT or to execute
a Request for release on behalf of the Holder
• Lack of “Chain of Title” – Original holder was XYZ, but
the signer alleging to be the CURRENT holder is ABC –
does Note contain any indorsements from XYZ to ABC?
• OLD loans (maturity date more than 15 years ago) –
Holder of EOD may not be alive or no longer exist –
homeowner can be referred to CRS 38-39-201 or can
go to Court for Order declaring the Deed of Trust is
Released.
CAUTIONS!
• Signatures and notarizations of officers of
entities should clearly INDICATE the
title/position of that person with the entity,
such as:
• ABC Bank
By _______________________________
Tom Smith, Vice President of ABC Bank
The foregoing Request for Release was acknowledged before me
on _________, 20__ by Tom Smith, as Vice President of
ABC Bank.
_________________________________
Notary Public
CAUTIONS!
• Sometimes the EOD (promissory note etc.) is
NOT to be cancelled or marked “paid in full” –
it could be that the property is no longer
under a lien for payment of the EOD but some
OTHER obligations still exist under the EOD so
the EOD will NOT be “extinguished”
• Usually the submitter (lender) will indicate for
the PT to leave the EOD “live” but to only
release the DOT (the DOT is the “lien” on the
property described)
CAUTIONS!
• MANY submitters (lenders or servicing agents)
ask that the Clerk & Recorder return the
recorded Release and loan documents to
them and they forward it to the borrowers.
BUT frequently they do not forward those
documents in a timely manner. If your Clerk’s
records show the Release was recorded and
sent back to the submitter, you may refer the
customer to their former lender to ask that
the release and “paid” loan documents be
sent to the customer
ELECTRONIC RELEASES
• Ingeo
• Kuvera
• Simplifile
These 3 outside vendors and other in-house
programs allow electronic submission,
examination, processing and forwarding to
Clerk for recording of Releases and Partial
Releases of DOTs.
SAMPLE FORMS
Release Tracking Sheet/Accounting Sheet
Reject Letter/Form
Reject Tracking Sheet
EXERCISE – Examine Some
Requests for Release of DOT
• Would you accept and process the Release?
• Would you reject and return the Request for
Release?
• WHY?