Patricia, a licensed West Virginia real estate broker, is listing a property in Wheeling. During her listing presentation, she learns that the seller took out a home equity loan two years ago using a deed of trust, and the lender is listed as the beneficiary. The seller now wants to pay off the loan and sell the property free and clear. Patricia correctly advises the seller that upon full repayment of the loan, the lender must take a specific action to release the deed of trust lien. What is the correct term for the document that releases a deed of trust lien in West Virginia once the debt is fully paid?
Correct Answer
B) A deed of reconveyance, executed by the trustee to return legal title to the trustor
When a deed of trust debt is fully repaid in West Virginia, the proper instrument to release the lien is a deed of reconveyance. Because the trustee holds legal title during the loan term, it is the trustee — not the lender/beneficiary — who executes the deed of reconveyance to return (reconvey) legal title back to the trustor (borrower). This document is then recorded to clear the lien from the title. This is consistent with the three-party structure of WV deeds of trust under W. Va. Code §§ 38-1-1 et seq.
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Related Topics & Key Terms
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Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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