School loan

The reader offers an overview of the fees paid to the lender to show the final gain

Q: I just read the article about the woman who did not receive her mortgage release document from her lender. If it was my big box lender, they wouldn’t get the mortgage released until they paid the special release and courier fees. I had to pay $158.50 two years ago to get it.

A: Thank you for your e-mail. Our column talked about the documents you could get after you pay off your home loan. Over the past dozen years, some lenders have failed to send documentation to their borrowers indicating final mortgage repayment.

Lenders can send a final loan statement indicating that the borrower has repaid the loan. They can even send a letter notifying the borrower that the lender has received a final payment on the loan and nothing more is due.

But the lender must also send a document to the borrower or directly to the office that deals with the registration or filing of real estate deeds. This document would be called a mortgage release or trust deed release.

You mentioned that you did not receive the release document. When you contacted your big box lender, they agreed to send you the document once you paid a fee. Usually, these fees cover registration or filing fees plus a nominal document preparation fee. When you sell your home and request a payment letter from your lender, the lender includes these costs in the quote. However, if you just end up repaying your loan naturally or sending extra money to repay the loan, the lender may deduct your account, close it, and show it as paid in full without sending the release document.

For example, in Cook County, Illinois, the cost of registering publication fees is $98. Some lenders may simply add the $98 fee to the refund amount and list it on the refund letter as a line charge. Some lenders charge $5 for the release letter while others charge a higher amount. Some lenders even ask homeowners to wire the mortgage money to them.

If you sell your home and the settlement agent transfers the final payment to the lender, the settlement agent may charge you a fee to transfer the funds and the lender you are repaying will charge an additional fee to receive the money.

Parallel thought: We really are in a business environment where everyone charges for everything.

Ilyce Glink is the author of “100 questions every first-time home buyer should ask(Fourth Edition). She is also the Managing Director of Best Money Moves, an app employers provide to employees to measure and reduce financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them via the website, BestMoneyMoves.com.