Your column mentioned that the reader might want to hire financial planners, real estate agents, real estate attorneys, CPAs, and insurance salespeople. It’s anything but a codebook.
Of course, I’m just teasing. I’m a regular reader as the advice is solid and it was still in this column. I started reading your column long before buying my first home in 2015 and found it invaluable.
More important: How to make sure your mortgage is paid off once you’ve paid it off
Ilyce and Sam respond: Thank you for being a loyal reader of our column. We know we may sound a bit like a broken record when we suggest readers consult various professionals about their issues. But, our readers rarely give us enough information to allow us to provide an answer with prescriptive details.
Another part of the problem is space. We have limited space to answer questions.
Most questions could take several pages to answer completely. In fact, Ilyce has written books answering questions for homebuyers (“100 Questions Every First Time Homebuyer Should Ask”) and Homesellers (“100 Questions Every Homeseller Should Ask”). Each of these books has about 500 pages.
But our fabulous editor, Carrie Williams, would burst into tears if we tried to provide that level of detail in our columns. Thus, we aim to provide advice on the big problem in each question and suggest other possibilities. This is another reason why we suggest readers consult a professional.
Finally, some of the questions we receive seem simple – they may only be one sentence long – but they are actually quite complicated to answer. Take the tax code (“Please,” as the Marx Brothers would say). If you think about it, a tax question may seem simple, but it is actually quite technical and complicated. Since we don’t want to get the details wrong, we provide the basics, and more.
For every tax question we receive, we know many other readers have the same question with a little twist. Many do not realize that the answer to this question has profound implications. So we try to provide a general answer by gently nudging a local professional who can provide the nuances and details that space constraints and lack of information prevent us from providing.
Glad you find the section useful and entertaining.
Comment: Regarding your article about getting a mortgage release securing a debt that has been paid, many mortgages require the lender to release the mortgage lien (mortgage release) when the debt has been paid. Often, a mortgage expressly states this obligation of the lender.
A borrower should not have to pay for the mortgage release and should ask the lender to email them the recorded release as part of the signed documents when repaying the loan.
Ilyce and Sam respond: We agree that all lenders should issue the release of the mortgage or deed of trust once the underlying debt has been repaid by the borrower. When a person takes out a loan to buy or refinance a home, the lender takes that home as collateral. The lender does not physically take the house, but places a lien against the house using a mortgage or deed of trust.
The mortgage or deed of trust gives the lender the right to sell the home to pay off the debt if the borrower fails to make the loan payments and the loan is in default.
Your comment is about a borrower who has made all their mortgage payments and paid off the loan balance to zero, or is making a final final payment to bring the balance due to zero. In both of these situations, the lender must release the mortgage by sending a mortgage release to the office that handles real estate registration or filing in the county in which the property is located. In the case of a deed of trust, the lender issues a release of the deed of trust and this form must also be registered or filed.
Other questions: the documents you should receive when your mortgage has been paid off in full
When it comes to loan repayments, Sam sees two costs in his practice: reimbursing the lender for registration or filing fees for releasing the mortgage or deed of trust, and faxing fees for send the repayment letter to the borrower or the borrower’s agent. The government office that deals with the registration or filing of the documents sets the cost of the registration or filing, and the lender has nothing to do with it. On the other hand, the cost of faxing the payment letter is fixed by the lenders. These fees can range from nothing to $50.
Nowadays, it would seem to us that faxing the repayment letter to the borrower or their representative is cheaper than generating the paper repayment letter and mailing it.
Sam has yet to see a lender pay out-of-pocket fees paid to third parties when he can get the borrower to pay those fees. In the rare event that lenders charge a fee to prepare the discharge of the mortgage or deed of trust, we agree with you that the lender must absorb this cost. Sam doesn’t come across this often because most lenders don’t charge a fee to prepare these documents.
However, nowadays it seems that each company has unbundled the amount it charges for its goods and services. You have stores selling goods and then selling you warranty coverage for those goods. It used to be that manufacturers sold their products and included a warranty that covered you for a decent amount of time.
Now you have service providers that charge you for the service and then add the many other charges that were once included as part of the underlying service. You can clearly see this with the airlines and their pricing structure.
At this point, it seems that the only fees charged by lenders at the end of a loan are the fax payment fees and refundable registration or deposit fees. We’ll see if it stays that way.
Ilyce Glink is the author of “100 questions every first-time home buyer should ask(Fourth Edition). She is also CEO of Best Money Moves, an app that employers provide employees to measure and reduce financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through his website, bestmoneymoves.com.
©2022 Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency, LLC.