Attorney Craig Billings Miller
In December 2013, the Wisconsin legislature repealed portions of the mortgage satisfaction law and enacted an update to its existing statutory scheme. While the updated statutory scheme is based upon the Uniform Residential Mortgage Act, there are a few differences of note. The updated statute is a reaction to the developments surrounding the secondary market for residential mortgages, and the difficulties debtors and title companies were facing in getting satisfactions and releases of mortgages in transactions.
Highlights of the New Statutory Scheme:
- If proper request procedure is followed, the Secured Creditor has 7 days to provide the payoff statement (or per statute “reasonably longer period” if property is not residential).
- A Secured Creditor who fails to timely send a payoff statement is liable for actual damages, plus $500. If a Secured Creditor does not pay damages within 30 days of receipt of notice demanding payment, it may also be liable for reasonable attorneys fees and costs.
- A Secured Creditor that sends a payoff statement containing an understated payoff amount may not deny accuracy of the payoff amount against any person that reasonably and detrimentally relies upon the understated payoff amount (e.g., cannot deny satisfaction of mortgage for bona fide third party purchaser.
- This new requirement does not relieve borrowers from obligations to Secured Creditors under the promissory note.
- Upon receipt of payment, Secured Creditors now have 30 days to prepare AND submit for recording the satisfaction of mortgage.
- A Secured Creditor that fails to timely submit the satisfaction of mortgage for recording is liable for statutory damages and attorneys fees (must be given notice and opportunity to cure).
- Creates “self-help” satisfaction procedures for certain parties who follow statutory procedures.
- Generally, creates reliability for payoff statements, by preventing Secured Creditors from qualifying the accuracy of a payoff statement.
The new updated Mortgage Satisfaction Law should help both Secured Creditors and borrowers in that it provides more certainty with respect to the satisfaction of secured obligations. However, Secured Creditors have new obligations under the new statutory scheme and the failure to comply results in penalties.
If you are a Secured Creditor and have questions about your new obligations under the updated Wisconsin Mortgage Satisfaction Law, contact Neider & Boucher, S.C. to discuss how to avoid potential traps for the unwary.