What happens if my mortgage servicer doesn't send me the payoff statement that I requested?

Question

I want to pay off my mortgage loan, so I called the servicer to ask how much it would cost. The representative I spoke to told me to send my request in writing, and then they would send me a payoff statement with the total amount due.

I sent my written request over two weeks ago. But I still haven't received the statement. What should I do? Can I pay the outstanding amount shown on my monthly payment statement to satisfy the debt?

Answer

You can't just pay the amount shown on your monthly mortgage statement to pay off the loan. That amount is your outstanding loan balance, not a payoff amount. You need an official payoff statement from the servicer to ensure you pay the correct amount.

Under federal law, the servicer must generally send you a payoff statement within seven business days of your request, subject to a few exceptions. (12 C.F.R. § 1026.36.)

Because you haven't received a statement within this time frame, you might want to send a "notice of error" to the servicer asking it to provide the statement. By law, the servicer must respond to you within seven days, excluding legal public holidays, Saturdays, and Sundays. (12 C.F.R. § 1026.35.)

Understanding Payoff Statements

A payoff amount is how much you must actually pay to satisfy the debt. It will include all the amounts you owe, including interest through the day you intend to pay off the loan, any fees or costs incurred, etc.

You generally need to request a payoff from the servicer to get a payoff amount. The servicer will then prepare the statement, which will include the total amount you owe and the date that the amount is good through.

In addition, it will provide instructions on how to wire the payment or where to send a check.

When The Servicer Must Send You the Payoff Statement

Under federal mortgage servicing rules, if you make a written request for a payoff statement, the servicer generally must send you the statement within seven business days after it receives the request.

Exceptions. The servicer doesn't have to meet the seven-day deadline if any of the following situations apply.

• The loan is in bankruptcy or foreclosure.
• The loan is a reverse mortgage.
• There was a natural disaster or other similar circumstances.
• The servicer specified reasonable requirements for making the payoff request (such as requiring you to send the request to a specific mailing address, email address, or fax number), and you didn't follow these requirements. (12 C.F.R. § 1026.36.)

If any of these exceptions apply, the servicer must provide the payoff statement within a reasonable time.

What to Do if You Don't Receive the Payoff Statement

If you don't receive the payoff statement within an appropriate time frame after your request, you can send your servicer a written complaint (called a "notice of error"). (12 C.F.R. § 1026.35.) Your written complaint should include:

• your name
• information that allows the servicer to identify your mortgage loan account and
• a description of the error (that is, that the servicer failed to provide you with a payoff statement).

You can also send a notice of error disputing the accuracy of any payoff statement you receive if you think the amount is incorrect. Federal mortgage servicing regulations require the servicer to correct the error, if there is one, within seven days, excluding legal public holidays, Saturdays, and Sundays.

If your servicer doesn't respond to the notice of error, you should consult an attorney who can help you enforce your rights.