Topic: Mortgage Payoff Statements and Releases
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How should we disclose the Illinois Department of Revenue’s Rental Housing Support Program surcharge, which county recorders collect with each mortgage recording? Is the surcharge exempt from the finance charge calculation, and should it be disclosed in the “Taxes and Other Government Fees” section of the Loan Estimate (LE) and Closing Disclosure (CD)?
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We believe that the Rental Housing Support Program surcharge is exempt from the finance charge calculation and should be disclosed in the “Taxes and Other Government Fees” section of the LE and CD. Regulation Z provides that taxes and fees prescribed by law that actually are or will be paid to public officials for perfecting…
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Are we allowed to charge a fee for releasing our lien after a borrower pays off their home equity line of credit (HELOC)? When we added a lien release fee to our documents, our loan document provider produced a “critical warning” stating that under Illinois law, the lender must pay all expenses to release a security interest in real estate when the security interest no longer secures any credit under a line of credit.
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Yes, we believe that Illinois law permits banks to charge HELOC lien release fees, provided your customers have agreed to pay such fees in the HELOC agreement and they have been properly disclosed under Regulation Z. Section 4.1 of Illinois’s Interest Act prohibits lenders from charging for “expenses, including recording fees and otherwise” when releasing…
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We assess a “fax/email” fee when sending payoff statements for home equity lines of credit (HELOCs). When disclosing this fee at origination, is it sufficient to state that the fee will be charged, or do we need to provide the amount of the fee in the disclosure? We will ensure that the fee we assess is reasonable given the CFPB’s scrutiny of “junk fees.”
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We recommend disclosing the amount of the fax/email fee at origination if it is known. Although Regulation Z does not expressly require creditors to disclose the amount of fees associated with payoff statements, it does require you to explain how the fee amount will be determined. For HELOCs, Regulation Z requires creditors to disclose an…
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We are currently assessing a “fax/email” fee when we send payoff statements for home equity lines of credit (HELOCs). Are there any prohibitions against this practice under state law?
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No, other than Regulation Z’s prohibition against charging fees for payoff statements for high-cost mortgage loans, we are not aware of any law prohibiting charging fees for sending payoff statements, provided the borrower has agreed to the fee in the loan documents. Regulation Z requires that for consumer loans secured by a consumer’s dwelling, the…
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In most Illinois counties, we are charged an “erecording” fee when electronically recording release deeds. Does Illinois law permit us to charge this fee to our borrowers, or do we have to absorb it?
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We believe you are permitted to charge borrowers an erecording fee when electronically recording a release deed (or release of mortgage) under Illinois law — provided your customers have agreed to the fee. Although Section 4.1 of the Interest Act appears to prohibit lenders from charging borrowers for “expenses, including recording fees and otherwise” when…
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How can we properly disclose at the origination of a home equity line of credit (HELOC) what the release fee will be when the loan is terminated? We are aware that such fees are allowable in Illinois, but we can’t say with certainty what the amount will be, and the fees vary by county.
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We do not believe you are required to disclose the exact amount of the release fee at the HELOC’s origination. Rather, you can disclose the existence of the release fee and explain how it will be determined. For home-equity plans, Regulation Z states that creditors must disclose at account opening “the circumstances under which a…
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How can we properly disclose at the origination of a home equity line of credit (HELOC) what the release fee will be when the loan is terminated? We are aware that such fees are allowable in Illinois, but we can’t say with certainty what the amount will be, and the fees vary by county.
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We do not believe you are required to disclose the exact amount of the release fee at the HELOC’s origination. Rather, you can disclose the existence of the release fee and explain how it will be determined. For home-equity plans, Regulation Z states that creditors must disclose at account opening “the circumstances under which a…
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What state statute covers a bank’s release of a mortgage that has been paid off?
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The Illinois Mortgage Act establishes the requirements for mortgages that have been paid off, and the Mortgage Certificate of Release Act imposes additional requirements specific to mortgages on 1–4 family residential properties securing loans under $500,000. The Illinois Mortgage Act requires that mortgagees take one of three alternative actions within thirty days after “full satisfaction…
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In Illinois, is there a time requirement for filing a release of mortgage after a loan is paid off? If so, does this still apply if the mortgage has a cross-collateralization clause and the bank has additional loans with the borrower? Also, are we required to file the release of mortgage with the recorder of deeds, or may we provide an unrecorded release of mortgage to the mortgagor for recording?
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The Illinois Mortgage Act requires that mortgagees take one of three alternative actions within thirty days after “full satisfaction and payment of all . . . sum or sums of money as are really due . . . from the mortgagor”: Deliver the release to the county recorder. Deliver the release to the mortgagor,…
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We recently discovered that our home equity line of credit (HELOC) and junior lien residential mortgage loan agreements prohibit us from charging a lien release fee when releasing the mortgage. However, our first lien residential mortgage loan agreements permit us to charge a lien release fee. Is there an Illinois law that allows release fees to be charged for first lien residential mortgages but prohibits such fees for HELOCs or other junior lien mortgage loans?
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We believe that Illinois law permits banks to charge lien release fees for HELOCs and junior lien residential mortgage loans, provided that your customers have agreed to pay such fees in your loan agreement. In this case, your bank’s HELOC and junior lien residential mortgage loan agreements prohibit such fees, and the agreements’ restrictive language…