Final answer:
Upon paying off a $300,000 mortgage loan, the bank records a satisfaction of mortgage, a legal document that officially shows the loan has been paid and releases the lien on the property.
Step-by-step explanation:
When a homeowner pays off their $300,000 mortgage loan, the lending institution, typically a bank, is required to record a satisfaction of mortgage. This is a legal document indicating that the borrower has fulfilled the obligations of the mortgage by paying it in full. The satisfaction of mortgage must be recorded with the appropriate government office, such as the county recorder or register of deeds, to formally remove the lien on the property.
Once recorded, the satisfaction of mortgage serves as evidence that the debt associated with the mortgage has been paid off, and the lien that the mortgage placed on the property is released. This process is an important part of the mortgage cycle, ensuring that the borrower's property title is clear, and it guards against any future claims by the lender related to the loan.