DD 3/15 Penalties for Late Mortgage ReleaseMORTGAGES; RELEASES: Failure of a mortgagee to release deed of trust within 30 days following payment and request by mortgagor entitles mortgagor to statutory penalty of 10% of mortgage loan. Martin v. STM Mortgage Co., 903 S.W.2d 548 (Mo. Ct. App. 1995) Mortgagor sought a statutorily-authorized penalty of 10% of the mortgage loan amount . The statute (Mo. Rev Stat. §443.130) imposed the penalty against any mortgagee failing to release its deed of trust within 30 days following receipt of payment accompanied by request for such release.
The mortgagor requested a payoff statement which, when received, warned that only certified funds would be accepted for payoff. The mortgagor tendered an uncertified check in the full amount along with a letter requesting the release. The release was not recorded until 21 days past the statutory 30-day period, and only after further notice was given by the mortgagor (following expiration of the 30-day period).
The court held that the 30-day period starting running when the uncertified check was paid by the drawee bank. Although the mortgagor made his request for release prior to that time, the request was not completely void, as it constituting a continuing request for a release within the applicable period. Unfortunately for the mortgagor, the court also held that the mortgagor had failed to establish at trial when the check had been paid, thus invalidating the mortgagor's right to collect the penalty.
Reporter's Comment: By the books? Or was the mortgagor poured out owing to the arguably de minimis nature of the delay (there was no suggestion that the mortgagor was actually damaged)?
Editor's Comment: Although the mortgagor lost here, lawyers for lenders would do well to advise their clients that that there's a new world of penalties out there for bureaucratic delay. Note that the lender was not entitled to insist on "good funds" as a tender when the documents did not require it. Are there other routine bureaucratic obstacles that lenders place before borrowers that might place the lenders in jeapordy under one of these penalty statutes? What if the borrower does tender "good funds" but the lender demands some other document, such as a copy of the note, or some obscure file number, before it will process the payment? Then the lender fails to record a release within the thirty days. Penalty? Probably.
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