What is an act of renewal?
A mortgagee issues a new assignment to indicate that the borrower has been released from the mortgage debt. The deed transfers title from the lender, also called the beneficiary, to the borrower.
This document is most often used when a mortgage has been paid in full. It includes a legal description of the property as well as the plot number of the property, and it is often notarized.
Some states use a satisfaction mortgage document rather than a deed of transfer, and states that recognize deeds of trust, such as California, instead issue a full transfer in this case, signed by the trustee and notarized.
How the acts of renewal work
An assignment is registered in the county where the property is located. Once the deed has been registered, any research on this property will show that the lien has been paid in full.
A property with a lien on it can only be sold if the lien is a mortgage and arrangements have been made to pay it in full from the proceeds of the sale of the house. In such situations, the registration of the instrument of restitution is part of the process of closing the sale of the house, and its registration is generally managed by a title insurance company.
Renewal vs security
The bank holds security over the accommodation while the mortgage is still in progress. The bank can foreclose the borrower, evict them, and take possession of the house, if the borrower does not pay the mortgage. The lender can then sell the property in an attempt to fulfill the unpaid mortgage obligation after the foreclosure process is completed.
The restitution act proves that the bank no longer has security over the accommodation. An owner who has received a return document cannot be seized by the lending institution, and he can transfer the property at any time, free of charge and without privilege. He must register it with the county in which the property is located.
Key points to remember
- An assignment is most often issued when a mortgage has been paid in full.
- An owner who has received a restitution certificate cannot be seized by the lending institution.
- Lenders of second mortgages or home equity lines of credit (HELOC) who maintain a security interest in the home after the first mortgage is paid can still exercise their right to foreclose on their personal loans.
A homeowner can still be threatened with foreclosure by the local government if they fail to make property tax payments in a timely manner. This process can be initiated by written notice and without involving the court in states that recognize a non-judicial foreclosure process, so these owners may not receive much warning. A restitution act has no effect or interaction with property taxes.
The Department of Veterans Affairs provides personalized assistance to veterans and military personnel at risk of seizure.
Second mortgages or home equity lines of credit (HELOC) generally give the lending institution security over the home when the property is used as collateral for this particular loan. These lenders can also exercise their foreclosure rights in the event of borrower default. An act of retrocession linked to the first mortgage would have no effect on these loans.