Thursday, March 06, 2008

query: why does the title company request a payoff

The title company requests a mortgage payoff letter so that they are certain is hasn't been tampered with.

A sloppy title agent will allow accept a payoff letter from an interested party who may be motivated to commit fraud. What happens if the payoff amount has been altered and the closing is over and the payoff is short? The title company has an instant claim and loss if they cannot recover damages form the seller.

A prudent title agent will always order their own letter or at the very least contact the mortgage lender and validate the data contained in the payoff letter in hand.

1 comment:

Settlement said...

Simply because its one of their task. They are the one in charge with all the financial paper transaction. But as what you've said it can lead to a fraud that's why be careful on choosing a title company