Pay off principal balance

[Robert Shoffner]

Sorry if this is a double post, I don't think the one on my phone posted though.....

So normally when buying a pre-foreclosure (or any house), one gets a payoff (which includes pro-rated interest, any fees, etc.) from the lender and it is paid in full at closing.  

I have heard of investors getting the deed and paying off the 'principal balance' as opposed to the payoff.  What risks, if any, are there to the investor-buyer?  Why would one do this?   Would the bank still have a lien worth $0?  Would they or would they not cancel the deed of trust/mortgage?

Any feedback is appreciated.