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 that 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 still haven't received the statement. What should I do? Can I just pay the outstanding amount shown on my monthly payment statement to satisfy the debt?

Answer

No, you can’t just pay the figure shown on your monthly mortgage statement to pay off the loan. That amount is your outstanding loan balance, not a payoff amount. To ensure that you pay the correct amount, you need an official payoff statement from the servicer.

Under federal law, the servicer is generally required to 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 what’s called 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.) This is discussed in more detail below.

Understanding Payoff Statements

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

To get a payoff amount, you generally need to request it from the servicer. The servicer will then prepare the statement, which will include the total amount you owe and a 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, 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, then the servicer must provide the payoff statement within a reasonable amount of 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 you make your request, you can send your servicer a complaint in writing (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). (To learn more about how to make your servicer correct an error or provide you with important information, read How to Dispute Mortgage Servicer Errors.)

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