Tuesday, February 26, 2008

query: what does it mean request mortgage payoff letters

A mortgage is a lien against the real estate. Title agents and those who will process the paying off of a mortgage must make certain that they are collecting enough money to cover all outstanding fees and interest PLUS they must get specific instructions from the mortgage lender setting out HOW and WHERE to send the money. All of this information is contained in the mortgage payoff letter.

First, I would HOPE that the mortgage payoff letter is being requested by the title insurer and not the real estate agent or the borrower. The title insurer should control the mortgage payoff entirely, from the point of obtaining the mortgage payoff letter to the delivery of the funds. A borrower or some other interested party may be motivated to commit fraud by either altering the letter or diverting the funds.

It's important to note that whoever is ordering the mortgage payoff letter will need the authorization of the borrower and this authorization must typically be in writing. So, if you are selling property or refinancing property and someone is asking you to sign an authorization so they can request your mortgage payoff letter, please cooperate with them, otherwise your transaction may be delayed.

Be aware that some mortgage payoff letters take time. While we are lucky and some will arrive the same day as requested, there are others that may take a few days. Once again, cooperating with your title professional will move the file along.

One more thing, as a consumer, I'd like you to take the time to review your mortgage payoff letter. Ask for a copy and make certain that you understand it before you close. Try to get the copy in advance so you have time to think and time to contact your mortgage company with any questions.

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