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I have signed closing documents but the old mortgage has not been paid off.

I am refinancing and my lending agent advised before closing that I should not make my next mortgage payment to the existing lender. We discovered during closing that the payoff amount reflected this payment being made so I refused to sign the closing documents until my lending agent provided a written notice that I would not be responsible for any discrepancies or additional funds. Now the title company can't pay off the old note because the amounts do not match. What happens if the refinance company fails to provide the additional funding to pay off the existing mortgage? 
  • November 16 2013 - Harrisonburg
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Answers (10)

Profile picture for Primary Louisiana
I am surprised that the title company agreed to that.  Also, they usually have a written payoff from the mortgage company that is good for so many days.  I would wait for the dust to settle and analyze after the mortgage is paid off.  In theory it is money that you owe, but this situation is not typical.

Good Luck!
  • November 20 2013
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Make the payment to the existing lender NOW. You owe it. It covers interest for the month of October. mortgage payments are made in arrears.
  • November 20 2013
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Hi
if the escrow is short to close and there is discrepancy make sure you are current mortgage and keep continue otherwise you have to wait at least 12 months for refinance . if its a good deal and you are saving money try to work it out.

good luck

Omar Khamisa
  • November 16 2013
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The new finance company will not have the money, the old finance company will. They'll refund it. It might take a week, or ten days. Anyway, Ive only been doing this for about twenty years. It isn't even an real issue, except for the 5% late fee, until Nov.30. You caused the late fee by aborting your closing on the day you refused to close over a minor misunderstanding.

And, the existing mortgage can't get paid off until you close the new loan. This is elementary stuff and it seems as if you're over-reacting to nothing. Did you understand that the payoff doesn't include a payment that wasn't made?

As Joe Cafiero, another long time mortgage pro said, " I am sure the payoff was indeed correct.  Banks are not usually prone to just giving money away".

Do you need it explained another, more detailed way?

Here's the gist. Trust the payoff letter. It is a legal document. It is a speak now, or forever hold your peace kind of thing, from the lender's POV. If it is wrong the Bank eats the loss. If you've sent money that was already included, they'll send it back.
  • November 16 2013
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Profile picture for user7069132
Hi Hamp, I don't think I have killed the deal. I just feel like I am in limbo until the existing mortgage gets paid off. I feel that my lending agent should be responsible for giving me bad info since he admitted as much. If I make the November payment and the note gets paid off I will have a hard time recovering that money from the new finance company. Thanks
  • November 16 2013
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You just killed your deal over a bunch of nothing. And the bunch of nothing wasn't even your loan agent's fault.

If you request a payoff demand letter from your mortgagee, and there are any payments that haven't been made, but are due, the amount of the payment, plus any interest that is added for it being late, is in the payoff amount. Bet your house on it. If you request a payoff letter on Oct 31, that was good through, say, Nov 15th, and then you made your Nov 1 payment, anytime after the payoff demand letter was issued, you would have overpaid. But the funds would be refunded to you by the lender. A lender will not just deduct your payment from the payoff demand letter because it is due. They have to have received it, and credited it to your account.
  • November 16 2013
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Thanks Robert, I will contact them first thing Monday.
  • November 16 2013
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Profile picture for user7069132
Hi Joe, My lending agent admitted that he advised me wrongly and that the HUD did reflect me making my Nov mortgage payment. But I did sign the closing documents as is once he provided a guarantee that his company would pay any difference between the Amount held by the title company and the actual payoff amount of the mortgage. My concern is that this happened 2 weeks ago and they haven't resolved this yet.
  • November 16 2013
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Hi,

If you're referring to your November payment, which was due on November 1st, I would advise you to call your current lender immediately and explain your situation to them.  There is usually a grace period, as long as the payment posts by the 16th of the month, to avoid a late fee and possible credit reporting for a mortgage late.  Your best option at this point is to contact them and make a payment over the phone to avoid potential consequences.  After that is resolved, you can sort out the issues with your refinance with your loan officer.  Good luck.
  • November 16 2013
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I do not understand.  All that should have been done is that the HUD should have been updated to reflect the correct payoff and close the loan.  I am sure the payoff was indeed correct.  Banks are not usually prone to just giving money away.
  • November 16 2013
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