When a mortgage lender receives payment in full that mortgage lender must file a document at the county courthouse to let the public know that the mortgage has been satisfied. In PA mortgage lenders have 60 days to file this document. It is not uncommon for mortgage lenders to fail to file the satisfaction document and so unsatisfied mortgages are a constant source of title insurance claims.
When a title search reveals an unsatisfied mortgage the first order of business is to determine whether or not the mortgage had in fact been paid in full. If not, then someone must pay the balance before the mortgage lender will file the satisfaction document.
If the mortgage has been paid in full, there are options for moving the transaction forward. The best option is to contact the mortgage lender and get them to file the satisfaction. This may take time and if time is of the essence other options may be more appealing. The title insurance agent who is in charge of the current transaction will decide whether or not they will accept a letter of indemnification from a previous title policy or perhaps they may accept a letter from the mortgage lender affirming that the loan is paid in full and that they are in the process of satisfying the mortgage.
There are some cases in which the mortgage lender cannot be located and there is no acceptable way to cover the unsatisfied mortgage with indemnification. In these cases the owner of the property may need to hire an attorney and file an action to quiet title and remove the mortgage lien.