ALL PAYOFF INFORMATION MUST BE IN WRITING


Make sure to obtain all payoff information in writing prior to closing. While many lenders are willing to provide and confirm payoff amounts over the phone, ATG does not permit members to rely on verbal payoff information.


Under the Illinois Credit Agreement Act, 815 ILCS 160/1, et seq., no debtor may maintain an action on or related to a credit agreement unless the agreement is in writing. A credit agreement includes an agreement to release a mortgage in exchange for a payoff amount. Furthermore, in all states it is difficult to prove verbal agreements to provide a mortgage release. Therefore, if you receive only an verbal payoff amount, a lender could later repudiate a payoff check for being insufficient. In that case, the seller would owe any further amounts that the lender claimed, and would have no legal recourse against the lender. Also, because the lender would refuse to release the mortgage, ATG would receive claims against the title policies if a member or an independent closer closed the transaction.


To avoid this situation, for every transaction involving a mortgage payoff, members must obtain a written payoff letter from the lender before closing. The payoff letter must state that in exchange for the payoff amount, the lender will provide a release of its mortgage, and clearly identify the mortgage to be released. If necessary, members may rely upon a faxed letter on the lender's letterhead. If you have questions or difficulty obtaining written payoffs, please contact the Underwriting Department.

© ATG UB0501vol10no1

 

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