I am not familiar with the laws of Maryland, but I would not think that re-execution or even re-recording the mortgage would be necessary.  It should be sufficient to file an affidavit setting forth facts to show that the mortgage was mistakenly released and reinstating the lien.  The issue seems to be one of notice and so long as no third-party has yet relied on the release, an affidavit, properly indexed and marginalized, should be sufficient to provide notice to third-parties that the mortgage is still valid.

In the interim, however, there could be a big problem if a new creditor relies on the release or the property is sold to a bona fide purchaser for value.  If it were me, I'd get an affidavit on record as soon as possible.

Best,
Robert A. Franco
SOURCE OF TITLE

That is a really great suggestion.  Frankly I don't know if the clerk will accept such an affidavit but I will certainly relay this suggestion to the servicing lender.

Charlene

I don't think the recorder can refuse to record an affidavit.  As I mentioned, I don't know Maryland law, but around here the recorder has to accept a validly prepared document.  It isn't their job to determine the effect of an affidavit, only to put it on record.

In fact, in Ohio, a recorder can get in trouble for doing what yours did - telling you that you have to re-execute and re-record a mortgage to revive it.  That is legal advice that they are not permitted to offer. Really, your client should be talking to a Maryland real estate attorney to get that advice - that would be their best bet.  They have a serious problem and they need to get some good advice on fixing it.

Please keep us posted on what they do to correct the mistake. 

Best,
Robert A. Franco
SOURCE OF TITLE

I have actually had this very same discussion with several clerks and AG's here in Maryland. If they feel the document is defective in some way, they just refuse to record it.   Now if I were to try to do that, as I am not an attorney, I would be busted for sure!!  I put a call into the servicing lender and will definately keep you posted on the outcome of this.  Thanks for your input.

Robert,

I took your suggestion to the servicing lender and they advised, just as I thought, that the clerk will not accept an affidavit.  In fact the gentlemen went on to tell me that he has had the same exact problem in other states. I guess the powers that be are actually trying to look out for the consumer?   I can only guess that the clerks of the court want to make sure that the consumer is aware of the error, plays a part in the correction of the error., etc.  I suppose it could be imagined that someone might file a fraudulent affidavit..

Charlene

I don't see it.  The consumer isn't really being protected by refusing to record the affidavit. The borrower here did not pay off the note and I seriously doubt that the mistaken release would prevent a foreclosure if they default.  Equity would not allow the borrower to use such a mistake to their advantage.  Thus, the only concern is third-parties who might aquire an interest in reliance of the mistaken release (the borrower cannot act in reliance because they know that they didn't pay off the loan).

The lender is being placed in serious jeopardy if the recorder will only accept a newly executed mortgage in this case. It would be in quite a mess if a third-party creditor filed a lien, the property was sold to a bona fide purchaser for value, or the borrower filed bankruptcy. 

I still say they need a good real estate attorney in Maryland to take care of it.  There has to be a way to quickly and inexpensively address this problem.  I'm sure it has happened before.

Maybe a question to look at is whether or not there exists a document to revoke an erroneous Reconveyance.  California has such a specific document in its codes, so maybe a perusal of the document recorders manual would reveal a similar document in your state.  I am guessing that, since most states have amended their laws to tighten up the types of documents which are allowed to be recorded (mostly thanks to Common Law / Patriot types using the general "Affidavit" forms to push forth their own agendas since the 80's), an affidavit may indeed not be the correct specific document to submit.

Which specific requirements such a document might need in terms of signatures and phrasing, should appear in the policy handbook / codebook that the county keeps on hand.

Hope this helps.

William and Robert,

I thank you both for your excellent input. I will relay all of this information to the servicing lender. Hopefully, they will get what they need. I did urge them to seek legal counsel.  I gave them a few names and address of attorneys locally that may be able to help them.

It is a very curious situation and I am anxious to hear how it plays out.

Charlene

Wisconsin's old statute allowed for the rerecording of an unsatisfied mortgage.  They changed it to affidavit of correction since anyone who held the original  mortgage could make changes to it without the grantor or grantee's knowledge and re-record the original as a vaild document. The question is of reestablishing the lien which has been released.  As long as the release is properly executed and recorded and refers to the correct document, I don't believe that it can be undone by a re-recording and the released mortgage loses its priority against any intervening liens and encumbrances. **   Affidavits of correction are only effective if all parties (grantors and grantees) execute the affidavit and the mortgage  or a certfied copy of the mortgage is attached as an exhibit.  I guess the priority issue still needs to be answered.  

** Wisconsin also attempted to solve the problem of mistaken releases by limiting the assignment or satisfaction of mortgages to affect only one recorded mortgage (no mass assignments or releases).

James,

Thank you so much for your post.  I believe that the clerks of the court here in Maryland are using the same thought process.  I have not heard back from the servicing lender yet, but it is my belief that they are going to have to get the borrower to re-execute the document so that can get their lien in place.

Sincerely

Charlene