In securitisation, discharge of mortgage refers to the legal process of releasing a borrower from their obligation to repay a mortgage loan. This can happen in a number of ways, including:
- Repayment in full: The borrower repays the entire outstanding balance of the loan.
- Prepayment: The borrower pays off the loan before the end of the term.
- Short sale: The borrower sells the property for less than the outstanding balance of the loan, and the lender agrees to accept the proceeds of the sale as full payment.
- Foreclosure: The lender takes possession of the property and sells it to recover the outstanding balance of the loan.
When a mortgage is discharged, the borrower is no longer legally obligated to make payments on the loan. The lender is also released from their obligation to provide the borrower with any further services, such as property insurance or maintenance.