>Daily Development for Monday, January 4, 2008
>by: Patrick A. Randolph, Jr.
>Elmer F. Pierson Professor of Law
>UMKC School of Law
>Of Counsel: Husch Blackwell Sanders
>Kansas City, Missouri
>dirt@umkc.edu
>
>This one, again, contributed by Dale Whitman.
>
>MORTGAGES; SATISFACTION; “PROMPT SATISFACTION” STATUTES:   A lender that records a satisfaction of a mortgage within the time allowed by the state’s mortgage payment statute is not liable for statutory damages, despite the fact that the lender did not “deliver” the satisfaction to the mortgagor as required by the statute.

>
>Huber v. Wells Fargo Home Mortgage, Inc., 248 S.W.3d 611 (2008).
>
>The Hubers borrowed money on a home mortgage loan from Franklin, a mortgage banker. The loan was subsequently sold on the secondary market to Wells Fargo. On February 6th, 2004 they paid off the mortgage. Wells Fargo acknowledged receiving payment, and on February 23, the mortgage satisfaction (a “deed of release) was recorded.

>
>The mortgage satisfaction statute in Missouri, Mo. Rev. Stat. §443.130, was revised in 2004, but the revision was not in effect when these events occurred. Prior to the revision, the statute required the mortgagee to “deliver to the person seeking satisfaction a sufficient deed of release,” within 15 days of receiving a demand letter from the mortgagor. Failure to do so would subject the mortgagee to penalties of ten percent of the loan amount.

>
>On March 4, 2004, the Hubers (who had apparently had a conversation with a lawyer in the meantime) sent a demand letter to Wells Fargo. The bank responded by returning the Huber’s check for recording costs and explaining that the satisfaction had already been recorded. The Hubers then filed this suit to recover the statutory damages.

>
>The court wasn’t buying. While the statute literally required a “delivery” of the satisfaction to the mortgagors, the court said that its purpose was “to enforce the duty of the mortgagee to clear the mortgagor’s title so that the record is no longer encumbered.” Since Wells Fargo had done this already, it had complied with the purpose of the statute, even though it did not literally comply by delivering the satisfaction to the Hubers.

>
>Reporter’s Comment: Courts don’t generally like heavy penalties for failure to satisfy mortgages, and the old Missouri statute was one of the heaviest. As a result, there was a long string of decisions refusing to apply it for various technical reasons. Here, at least, the reason wasn’t a technicality. The court was correct that the Hubers got what was really important to them, even though they didn’t get a literal delivery of the satisfaction.

>
>The 2004 amended version of the statute reduces the penalty to $300 per day, extends the lender’s time to provide the satisfaction to 45 days after payment is made, and requires the lender to “submit for recording” the satisfaction, not to deliver it to the mortgagor. Thus the statute has become far less Draconian. It will be interesting to see if the courts become more willing to enforce it, since in general, one would expect that the heavier the penalty, the harder the courts will work to avoid enforcing it.

>
>The Reporter for this item was Dale Whitman of the Missouri, Columbia law school, emeritus.
>
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