Connecticut law also permits a property owner to release a mortgage through an affidavit indicating full satisfaction of the mortgage. However, this is not always the best way to accomplish the release from the property owner's stand point. You are entirely correct in bringing the situation to your client's attention either by listing it as an open mortgage or by noting that it was released by owner affidavit and including a copy of the affidavit in your abstract. As a closing attorney I would question something like this if I were representing the buyer. The law in Connecticut provides for more reliable methods of releasing a mortgage. We have an expedited procedure whereby a property owner can make demand on a lender to release a satisfied mortgage, which demand is sent certified mail return receipt requested. If the lender fails to release the mortgage the property owner can file an application with the Superior Court to discharge the mortgage, and the Court's order when recorded has the same effect as a release. If confronted with the owner affidavit in a title abstract, I think I would have a word with the Seller's Attorney about obtaining a court order of discharge. The procedure provides for the Seller's recovery of attorney's fees from the recalcitrant lender.
In the case where the lender has gone under or merged with another bank, It may be necessary to contact the FDIC to trace the current holder of the mortgage. This recently happened here about two years ago. Althouh the original mortgagee no longer existed, its current incarnation following several mergers and FDIC take overs properly issued the release.
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