We closed a refi borrower weeks ago and his lender at that time issued a pay-off that was verified verbally by the title co. Now the lender has (several weeks later) sent a new pay-off to the title co showing the amount needed to payoff the loan increasing by $400.00 dollars and if it’s not received immediately they are threatening to return the money they accepted initially and begin foreclosure proceedings against the borrower. It appears that they missed something and now they want more money. The title co is telling the borrower to pay it. Can someone please tell me what is to stop a lender from issuing a pay-off and the coming back much later asking for more money. The title co is saying the title insurance doesn’t cover that problem. Not sure how it doesn’t, it’s certainly not their (the title co) fault that the lender either issued an incorrect pay-off or then acknowledged it verbally or just plain out “wants more money”. But assuming that everything that the borrower knows about his loan comes from the lender, I don’t see how he (the borrower) should be responsible for that mistake. Any answers will be greatly appreciated.
until you have the reconveyence document which typically takes several month to come and is recorded, you are not officially released for the loan.
the title company in this case is acting as the conduct for the money; this is not a title insurance issue and they are not responsible for figuring out if the number is right or wrong.
figure out whether you actually owe the money. if you do, then pay. If you think you do not, call the lender and ask for itemized statement showing the calculation of the pay-off statement and try and work it out.