Upcoming Foreclosures

does a mortgage merge into a fee when the lender acquires a property?

I don't mean in a foreclosure, but if a borrower were to sell the property that has the lender's mortgage on it to the lender would the mortgage disappear automatically or does a deed of reconveyance technically still have to be filed?

Public Comments

1. If there is a mortgage on the property then the owner would be said mortgage company, the person in the house cannot 'sell' it to the person who already owns it. It's kinda like asking your parents to give YOU money for you to buy their car.
2. A deed is issued when a property is purchased. If it is mortgaged, the lender holds the deed until the mortgage is paid in full. The deed, with a seal or other prescribed information, is put on the deed to show that the owner has a clear deed. The mortgage sends a release of the deed to the government agency that records deeds, no fee paid at this time, it was paid when the mortgage was issued. If the owner sells the property before the mortgage is paid in full, the mortgage is paid from the proceedings of the sale. The seller gets whatever is left after the mortgage and all fees are paid. This is frequently less than anticipated.
3. I think what you're referring to is called a deed in lieu of foreclosure. This is where the owner of a property just signs the deed over to the mortgage company and the mortgage is terminated, rather than the lender filing foreclosure proceedings and seizing the property. So, in essence, the mortgage company is buying the property back from the owner by paying off his mortgage. Many mortgage companies will do this if the amount owed is very close to what they can sell it for. A foreclosure is a very expensive and time-consuming process for a lender, and they may just as well just take the deed back and sell the property in certain cases.