Mortgage holder can be sued to force payoff


November 20, 2005

My problem is that I have a private-mortgage holder and I am refinancing and want to pay off this bill. But I have been unable to get him to send me a payoff amount. My lender and I sent requests but we have not received a response. During the 10 years I have had the mortgage, I have never received any type of balance or amortization schedule. I also have never received a statement of interest paid at the end of each tax year. I have had to rely on my own calculations.

Do you know how this will be handled if he has not provided the information by my settlement date? Will it delay my settlement?

You should advise the title company or settlement agent promptly that you are having trouble getting a payoff amount from the private mortgage holder. The title agent can contact the mortgagee and make sure he understands his legal responsibility to accept payment and provide a release. The mortgage holder can be given an opportunity to attend the settlement and be paid off then in exchange for releasing the mortgage.

If this tactic does not work, you and the title agent will have to agree on a sum to be withheld from the sales proceeds to pay off the mortgage. The title agent then can notify the mortgage holder that the sum is being held pending receipt of a valid payoff and a release. If this does not result in resolving the matter, a court suit can be filed in which the court will determine the amount necessary to payoff the loan.

Under certain circumstances, the mortgage holder might be responsible for attorney fees if the court finds there was not substantial justification for the mortgage holder's action.

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