How to payoff mortgage you're not on???

Rental Property Investor · Fullerton, CA · Member since 2015 · 36 posts · 8 votes

Does anyone know how to pay off a mortgage when you're not on the loan? I have a situation where I did a creative deal and bought a home and convinced the seller to leave the mortgage on the property until I was ready to sell it and get it paid off.

Now that I'm ready to pay off the mortgage, the bank won't talk to me or tell me anything so I can pay it. Normally the seller can just give the bank authorization but the seller is completely unresponsive and not cooperating. So I'm stuck.

Any suggestions or experience with something like this?

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Looks like someone drinks the pace morby koolaid

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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
4y
James,
Contact a title company and request for the title attorney to order a pay off good for (30) days with per diem. The fastest way is to have the person who is on the mortgage to sign a written authorization to the title compny so the title company can act as a 3rd party on their behalf to order pay off. You will need to provide the title company with a contract to show agreement to purchase or retain property signed by all parties on title. The title company can prepare new deed and file book and page at county
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James Park
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Rental Property Investor · Fullerton, CA · Member since 2015 · 36 posts · 8 votes
4y
Hi Jason,

Thanks for your response.
The big problem is that the person on the mortgage simply won't cooperate.

If she was cooperative, this wouldn't be a problem. So unfortunately I'm having to find another solution. We've already provided the mortgage servicer the grant deed showing the property is in my name.

so not sure what to do at this point. Trying to find a workaround.

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Caleb Christopher
Title Representative · Denver, CO · Member since 2020 · 126 posts · 66 votes
2y
In this case I'd have an attorney send a letter demanding a payoff for the bank's lien against your property.
That said, for future reference and other readers, this is a great case study showing why it's critical to get a good durable power of attorney from the seller when buying subto.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@Caleb Christopher
An attorney letter will not do anything as they are not on the loan. Legally they cannot give the payoff or loan info to someone not on the loan
Even if your spouse was only one on loan the bank cannot talk to you.
Your idea on the power of attorney is excellent or the other option on sub2 is during transaction to have the original borrower send a letter to the servicer authorizing you to be able to access the account
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Caleb Christopher
Title Representative · Denver, CO · Member since 2020 · 126 posts · 66 votes
2y
@Chris Seveney I contend that an attorney letter will do quite a bit in this scenario. The lender should provide a payoff, but if they don't, I suppose all the better for the property owner, because the lien can be removed by judgment without payment.

Other than the payoff amount, the bank doesn't have to disclose account information. I get what you're going for, but my point is that if someone has a lien against a property you own, and they refuse to give you the information required to release that lien, it's not a stretch to see that you could just file a quiet title claim. If they continue to refuse to provide the information, the court action will cause them to cough it up, or their lien will get wiped out through a successful quiet title action.
To have a lien released through a quiet title action:
1. File a Lawsuit: You, as the property owner, file a lawsuit against the lienholder and any other parties with claims on the property's title.
2. Notification: All relevant parties are notified of the lawsuit, including the lienholder.
3. Legal Proceedings: The court will review the case and assess the validity of the lien and other claims on the property. If the lienholder cannot prove a legitimate interest in the property, the court may rule in your favor.
4. Quiet Title Judgment: If successful, the court issues a quiet title judgment, which effectively removes the cloud on the property's title, including the lien.
5. Recording: The quiet title judgment is recorded in public records, officially clearing the title of any conflicting claims, including the lien.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Looks like someone drinks the pace morby koolaid
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Caleb Christopher:
@Chris Seveney I contend that an attorney letter will do quite a bit in this scenario. The lender should provide a payoff, but if they don't, I suppose all the better for the property owner, because the lien can be removed by judgment without payment.

Other than the payoff amount, the bank doesn't have to disclose account information. I get what you're going for, but my point is that if someone has a lien against a property you own, and they refuse to give you the information required to release that lien, it's not a stretch to see that you could just file a quiet title claim. If they continue to refuse to provide the information, the court action will cause them to cough it up, or their lien will get wiped out through a successful quiet title action.
To have a lien released through a quiet title action:

File a Lawsuit: You, as the property owner, file a lawsuit against the lienholder and any other parties with claims on the property's title.
Notification: All relevant parties are notified of the lawsuit, including the lienholder.
Legal Proceedings: The court will review the case and assess the validity of the lien and other claims on the property. If the lienholder cannot prove a legitimate interest in the property, the court may rule in your favor.
Quiet Title Judgment: If successful, the court issues a quiet title judgment, which effectively removes the cloud on the property's title, including the lien.
Recording: The quiet title judgment is recorded in public records, officially clearing the title of any conflicting claims, including the lien.
quiet title takes a long time cost a lot of money.. and may not be successful. Title companies are pretty good at getting payoff demands in most all instances. Authorization to release information prior to buying the asset sub too was always mandatory for me when I bought sub too. easy to do and while your still on good terms with the seller. but keep in mind there are plenty of private notes out there and sometimes finding the bene can be tough.. we have this happen a few times a year since my parents were bene's on literally thousands of deeds of trust . and have both passed title company hunts me and my brother down for releases. But we know the score private folks may not be as accomodating as we are.
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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
2y
Quote from @James Park:

Does anyone know how to pay off a mortgage when you're not on the loan? I have a situation where I did a creative deal and bought a home and convinced the seller to leave the mortgage on the property until I was ready to sell it and get it paid off.

Now that I'm ready to pay off the mortgage, the bank won't talk to me or tell me anything so I can pay it. Normally the seller can just give the bank authorization but the seller is completely unresponsive and not cooperating. So I'm stuck.

Any suggestions or experience with something like this?
Your comment: "the seller is completely unresponsive"
Is it possible the seller is deceased?

As a last resort you tell the bank you bought the property, provide the Warranty Deed and escrow company name and number. Then they will work with you, once they verify you are the owner.

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Doug Smith
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
2y
Call a title company and have them do it. They call and get payoffs all the time. No one will bat an eye. You'll likely want them to make sure everything is properly filed and the paperwork is in order anyway. They'll make the same call you can, but when they say "I'm with a title company, they will give them the payoff."
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Caroline Gerardo
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
2y
@Caleb Christopher 's information is incorrect. Servicer and the Trustee don't care about you or your attorney letter. Doing a quiet title action will take 14 -20 months and cost you $20000- $50000. in legal fees. Courts are backed up and slow.

"creative financing" has many roadblocks

1. Bribe the seller/owner of record to call and order payoff. Offer her $1000 it will be cheaper than an attorney

2. Do you have the last statement? Add a whole payment and $1000 and send them good funds. They will send the reconveyance to the seller/borrower on the note. If you are selling or refinancing this will hold up your transaction

3. Several people suggested to get a title company involved. I bet you won't find one willing to do this. It's a great deal of work with liability for the title officer. Southern CA is escrow so it will be an escrow officer willing to stick their neck out for you if there is no transaction in progress. Only if you have a sale in process will they order the payoff by email, they don't do it on the phone and not on weekends. The email needs to be a .com legitimate one matching the signature line. There are fees for each payoff which get added to the loan. Depends on servicer a few charge a fee upfront. @James Park I think I did a loan for you in the past, or you have a common name. DM me who the servicer is and I might know someone in house that will assist you.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Caroline Gerardo:

@Caleb Christopher 's information is incorrect. Servicer and the Trustee don't care about you or your attorney letter. Doing a quiet title action will take 14 -20 months and cost you $20000- $50000. in legal fees. Courts are backed up and slow.

"creative financing" has many roadblocks

1. Bribe the seller/owner of record to call and order payoff. Offer her $1000 it will be cheaper than an attorney

2. Do you have the last statement? Add a whole payment and $1000 and send them good funds. They will send the reconveyance to the seller/borrower on the note. If you are selling or refinancing this will hold up your transaction

3. Several people suggested to get a title company involved. I bet you won't find one willing to do this. It's a great deal of work with liability for the title officer. Southern CA is escrow so it will be an escrow officer willing to stick their neck out for you if there is no transaction in progress. Only if you have a sale in process will they order the payoff by email, they don't do it on the phone and not on weekends. The email needs to be a .com legitimate one matching the signature line. There are fees for each payoff which get added to the loan. Depends on servicer a few charge a fee upfront. @James Park I think I did a loan for you in the past, or you have a common name. DM me who the servicer is and I might know someone in house that will assist you.

when I suggest title company facilitate the payoff . I make the assumption they have an open order for a sale or refi. Just clarifying my remarks.
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Caroline Gerardo
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
2y
@Jay Hinrichs I understand I believe two people suggested title but my guess from the wording is James is DIY payoff.
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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Caleb Christopher
Why are you responding to a 2yr old post?
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Cristian Portillo
Real Estate Investor · Columbus, GA · Member since 2017 · 24 posts · 7 votes
2y

@David M. lol I just noticed that
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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y
Yes, it's a 2 year old post but it's certainly more relevant now than it was 2 years ago.
An individual sub-to purchaser is not a "successor in interest" according to the laws regarding payoffs. This is why many go the trust route -- a trustee would be a SII if properly documented with the lender.
Getting a payoff for an original borrower who is not currently cooperating and did not execute appropriate paperwork at closing can certainly be a problem even for title companies in the middle of a current transaction. Most lenders need SSN and ink signature and actually compare to the signature on file.
Perhaps a DOS/acceleration notice would include the information required to make the payoff.
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
2y
@Tom Gimer and others. I certainly understand that a mortgage company can be legally limited to who they can give a payoff too. Yet how can a mortgage company possibly foreclose if the won’t let the owner of the property pay off? Seems like a legal catch 22.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Ned Carey:

@Tom Gimer and others. I certainly understand that a mortgage company can be legally limited to who they can give a payoff too. Yet how can a mortgage company possibly foreclose if the won’t let the owner of the property pay off? Seems like a legal catch 22.

dont know about all states but I do know in states I have bought foreclosures the owner can show up with the opening bid and payoff the property I have had it happen to me as I stood there ready to bid only to have the owner show up and redeem and pay it off.
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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y
Quote from @Ned Carey:

@Tom Gimer and others. I certainly understand that a mortgage company can be legally limited to who they can give a payoff too. Yet how can a mortgage company possibly foreclose if the won’t let the owner of the property pay off? Seems like a legal catch 22.

I don't think substitute trustees are held to the same standard as mortgage servicers/lenders. I've never had a ST ask for an authorization.
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