Document Cancel Fee - standard in a mortgage?

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Hello, wise FWF members.

As a first time owner, when I got my condo mortgage in Maryland, I asked the bank if there would be any penalties or fees for paying it off ahead of schedule. They said no additional charges.
Fast forward to the happy day when I am about to pay off the remaining principal and I ask for a payoff quote (no fees for a quote).
I am asked to pay: 
The current total unpaid Principal Balance is:         $ 58.41
Interest at  3.25000%                                               .13
Expedited Stmt. Fee                                                 .00
Document Cancel Fee                                               50.00
Re-Quote Fee                                                        .00
* * * * TOTAL AMOUNT TO PAY LOAN IN FULL * * * * * $            108.54

I look at the HUD-1, and at the title documents, but I do not see anything about a "document cancel fee." I phone the bank (mortgage lender), and they insist they see a Document Cancel Fee mentioned in my loan paperwork. They also say it has something to do with how they must inform my county that the mortgage is paid off, so that county taxes are hereafter my responsibility, and that this information takes a few months to travel to the county...and the Document Cancel Fee goes towards this business with the county. I asked the rep to note in my account that I was protesting the Document Cancel Fee and was going to send payment for just the $58.54 until the fee was clarified. 

After I made my $58.54 payment, I noticed that the lender had unilaterally (without my permission) taken out $50 from my escrow account. Now my mortgage balance shows as zero, but my escrow account is down $50.

Question #1. As a first time condo owner, I am confused. Are Document Cancel Fees a norm, or is the lender trying to milk some money at the ending of the mortgage?
Question #2. Typically, is any action regarding the title or the county records offices required on my part after the mortgage is paid off, for example am I to contact the county or any other office? I am a newbie to this, so I appreciate your tips.

Thanks.

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Moderators, please feel free to archive this thread.

Thanks to everyone for the responses and advice!

FW10001 (Feb. 02, 2017 @ 1:21p) |

Doubt that is "worst advice ever".  Can think of a lot worse.

I think the point is that the "document cancel fee" is usua... (more)

RidicuRuss (Feb. 06, 2017 @ 1:11p) |

I don't know about your mortgage, but I'd strongly suggest reading the contract you signed. At the very least, I highly ... (more)

dblevitan (Feb. 06, 2017 @ 1:50p) |

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That would be lien release fee, it's pretty standard. You would have to take that lien release to county/Parrish to have them record it. They will charge you a nominal fee like $15 or $20 to record.it.

whenever I have refinanced, never been charged a fee for paying off the old loan and they send still file with the county showing that the loan is paid and they no longer have any interest.

They're also known as loan reconveyance fees. They're state dependent - not all states allow them. On a recent refinance, ours were over $100 (which is apparently standard in my state of WA). The bank should also be able to tell you if you'll receive anything once the loan is closed and the lien removed.

Your HUD-1 only lists charges to initiate the loan, so it wouldn't be listed there.

If they say it's in your loan docs, ask for the page number to locate on your own, or ask them to fax/email a copy of the page. Shouldn't be rocket science.

It's also possible that could be a county processing charge that is mandatory for the lien release or changing the info on responsibility for paying the taxes. In that case you're also stuck as those are county fees you would be responsible for.

The page number they quoted was a few page numbers further than the last numbered page I had gotten as my copy of the deed after the financing.
I suppose the closing company didn't print every page in the deed documents. 

dblevitan said:   They're also known as loan reconveyance fees. They're state dependent - not all states allow them. On a recent refinance, ours were over $100 (which is apparently standard in my state of WA). The bank should also be able to tell you if you'll receive anything once the loan is closed and the lien removed.
  If my loan is being paid off in full, why would there be a loan reconveyance involved? In your case, you mentioned there was a refinance.

FW10001 said:   
As a first time owner, when I got my condo mortgage in Maryland, I asked the bank if there would be any penalties or fees for paying it off ahead of schedule. They said no additional charges.
Fast forward to the happy day when I am about to pay off the remaining principal and I ask for a payoff quote (no fees for a quote).
I am asked to pay: 
The current total unpaid Principal Balance is:         $ 58.41

  If you're paying it off ahead of schedule, how can the unpaid principal balance be just $58.41? It should be tens or hundreds of thousands of dollars. 

atikovi said:   
FW10001 said:   
As a first time owner, when I got my condo mortgage in Maryland, I asked the bank if there would be any penalties or fees for paying it off ahead of schedule. They said no additional charges.
Fast forward to the happy day when I am about to pay off the remaining principal and I ask for a payoff quote (no fees for a quote).
I am asked to pay: 
The current total unpaid Principal Balance is:         $ 58.41

  If you're paying it off ahead of schedule, how can the unpaid principal balance be just $58.41? It should be tens or hundreds of thousands of dollars. 

  
They've been making additional payments over the years.

doveroftke said:   
atikovi said:   
FW10001 said:   
As a first time owner, when I got my condo mortgage in Maryland, I asked the bank if there would be any penalties or fees for paying it off ahead of schedule. They said no additional charges.
Fast forward to the happy day when I am about to pay off the remaining principal and I ask for a payoff quote (no fees for a quote).
I am asked to pay: 
The current total unpaid Principal Balance is:         $ 58.41

  If you're paying it off ahead of schedule, how can the unpaid principal balance be just $58.41? It should be tens or hundreds of thousands of dollars. 

  
They've been making additional payments over the years.

  That's not clear. Paying it off ahead of schedule implies paying the balance early in a lump sum, otherwise he would said that he was adding an additional amount to the monthly payments. That's just how I read it.

atikovi, as doveroftke wrote, I've been paying off the principal in chunks as soon as I could get any money freed up from CDs, etc. I know FWF wisdom is to invest spare money, but I just used it to pay down the loan principal, down to the $58 point. And then I brought it to zero, upon which the bank promptly (and without any notice to me) subtracted the Document Fee from the escrow account that used to accumulate money for the semiannual county taxes.
If the document fee is legit/standard, I'm OK. If not, ...well, that's why I came here for advice.

What county? It's might be on a website listing the fees for recordation.

FW10001 said:   atikovi, as doveroftke wrote, I've been paying off the principal in chunks as soon as I could get any money freed up from CDs, etc. I know FWF wisdom is to invest spare money, but I just used it to pay down the loan principal, down to the $58 point. And then I brought it to zero, upon which the bank promptly (and without any notice to me) subtracted the Document Fee from the escrow account that used to accumulate money for the semiannual county taxes.
If the document fee is legit/standard, I'm OK. If not, ...well, that's why I came here for advice.

  As I said above, it's pretty standard.  It may also include the cost of registering the release of the lien with the county as some of the lenders do the electronic recording of liens/lien releases.  Why not call the bank and find out?

FW10001 said:   The page number they quoted was a few page numbers further than the last numbered page I had gotten as my copy of the deed after the financing.
I suppose the closing company didn't print every page in the deed documents. 


I think by law they are supposed to give you all pages in the loan document. That is why you have to sign and initial so many sheets at the end. That might be a page number they have, but doesn't necessarily mean that it was part of your closing. Ask them for your signature in the sheet.

I had the same scenario with a skethy compaany called Roudnpoint mortgage. They wanted to charge me $150 for it. I complained and refused to pay. They finally yeielded. This is away to make profits, even when loan is paiid off... there is a recording fee but that is normal buiness for most big name vendors life WF or any big lenderr...btw who is yyour mortgagor..

My mortgage is through BB&T.
They have already pulled the $50 fee from my escrow account.
If the fee is indeed standard stuff (Maryland), I'll let it slide.

Of course I called the bank...they said their over-the-phone-with-CSR system would not even let me pay off the Principal+Interest unless I paid the $50 Document fee. They said, I would later have to approach the county records and pay any county fees there. That's when I got suspicious about the $50 fee's purpose/utility.

You could always pay off the final amount and then some extra to cover interest instead of requesting a payoff quote and playing their game. They would be required to refund any over payments.

As for the $50 charge, ask around if it is standard in your area. Be glad it is only $50.

FW10001 said:   
dblevitan said:   They're also known as loan reconveyance fees. They're state dependent - not all states allow them. On a recent refinance, ours were over $100 (which is apparently standard in my state of WA). The bank should also be able to tell you if you'll receive anything once the loan is closed and the lien removed.
  If my loan is being paid off in full, why would there be a loan reconveyance involved? In your case, you mentioned there was a refinance.

There's no difference. In both cases you're paying off the existing loan. It doesn't matter whether you got the money from yourself or another lender (or the same lender). In all these cases the existing lien has to be released and the title transferred to the owner (either to be kept or to be given to a new lender).

Think of it as being the reverse of getting a mortgage. When you get a mortgage, you have to pay a title company or attorney to handle the paperwork and the recording fees to the government. When you close a mortgage, someone has to create the paperwork, submit it to the government, and pay the recording fees. You either pay for it over the course of the loan or pay for it separately.

One way to avoid the fee....Pay it down to a penny and continue making payment until the loan time is up.  

jwc208 said:   One way to avoid the fee....Pay it down to a penny and continue making payment until the loan time is up.  

Worst advice ever. Regardless of the loan balance the borrower is required to make regular monthly payments until the balance is paid off. It's part of the promissory note. In this case, if he makes 1 cent payment, he will be charged a late payment fee. Wasn't there a case when someone lost their house due this type of shenanigans? Like the automatic payment not being debited or property taxes being delinquent,. I think I'm getting old after being here for 16 yrs.

ach1199 said:   
jwc208 said:   One way to avoid the fee....Pay it down to a penny and continue making payment until the loan time is up.  

Worst advice ever. Regardless of the loan balance the borrower is required to make regular monthly payments until the balance is paid off. It's part of the promissory note. In this case, if he makes 1 cent payment, he will be charged a late payment fee. Wasn't there a case when someone lost their house due this type of shenanigans? Like the automatic payment not being debited or property taxes being delinquent,. I think I'm getting old after being here for 16 yrs.

  ach1199 , your advice is spot on. I did not want to play games and keep the mortgage active once I had already paid down most of the principal. I paid off the $58.xx, even though the bank tried to scare me by saying the account would stay unpaid unless I paid up the $50 document fee simultaneously. 

Thanks, dblevitan for your explanation. I am glad I asked for advice here.

Moderators, please feel free to archive this thread.

Thanks to everyone for the responses and advice!

ach1199 said:   
jwc208 said:   One way to avoid the fee....Pay it down to a penny and continue making payment until the loan time is up.  

Worst advice ever. Regardless of the loan balance the borrower is required to make regular monthly payments until the balance is paid off. It's part of the promissory note. In this case, if he makes 1 cent payment, he will be charged a late payment fee. Wasn't there a case when someone lost their house due this type of shenanigans? Like the automatic payment not being debited or property taxes being delinquent,. I think I'm getting old after being here for 16 yrs.

  Doubt that is "worst advice ever".  Can think of a lot worse.

I think the point is that the "document cancel fee" is usually just a junk fee added by the lender to process an early payoff, such as when refianancing.  I believe that in most cases, that no fee would be contractually due if the mortgage ran it course and was paid down to zero according to schedule.  I will bet that the actual promissory note does not mention this and the bank is just counting on the borrowers ignorance.  During a refinance, people pay this fee without questioning it because they just want to get the new loan done to save money, and the old bank can add whatever junk fees they like or they will hold up the process. 

In OPs case, I think the bank is adding the fee to a payoff quote, but would not charge it if the last payment was allowed to bring the balance to zero.  If the last payment brings the balance down to zero, then the bank is not going to charge a late fee for not paying the normal payment amount.  The promissory note even explicitly says that the final payment will be less than normal.

RidicuRuss said:   
I think the point is that the "document cancel fee" is usually just a junk fee added by the lender to process an early payoff, such as when refianancing.  I believe that in most cases, that no fee would be contractually due if the mortgage ran it course and was paid down to zero according to schedule.  I will bet that the actual promissory note does not mention this and the bank is just counting on the borrowers ignorance.  During a refinance, people pay this fee without questioning it because they just want to get the new loan done to save money, and the old bank can add whatever junk fees they like or they will hold up the process. 

In OPs case, I think the bank is adding the fee to a payoff quote, but would not charge it if the last payment was allowed to bring the balance to zero.  If the last payment brings the balance down to zero, then the bank is not going to charge a late fee for not paying the normal payment amount.  The promissory note even explicitly says that the final payment will be less than normal.

I don't know about your mortgage, but I'd strongly suggest reading the contract you signed. At the very least, I highly doubt that they can say "no prepayment charge" and then charge a fee only if you refinance. I actually did read my contract when I saw that fee on my payoff statement during my refinance and it clearly states "Upon payment of all sums secured by this Security Instrument, Lender...will reconvey the Property...to the person or persons legally entitled to it. Such person or persons shall pay any recordation costs and the Trustee's fee for preparing the reconveyance." The parts I left out deal with the lender/trustee relationship (since this is a deed of trust). But the point is that the fee is payable whenever the mortgage is paid off, not just in a refinance. Someone has to pay the government and the person preparing the documents and it's certainly not going to be the lender. Note that WA (where I am) uses deeds of trust whereas some other states use other methods of securing mortgages.



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