Is a Lender Required to Furnish a Payoff Amount Upon Request?
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Lenders sometime receive requests for a payoff amount during a foreclosure. This is because borrowers can reclaim their interests in property subject to foreclosure by paying off the balance of their loan, at any time before the clerk of the court files a certificate of sale (which is often referred to as the right of redemption). Consequently, lenders need to understand their obligations, under both Florida and Federal law, to respond to the request.
What Must be Included in The Request?
The first step in determining how to respond to a payoff request is assessing whether the request is proper and effective. Only certain parties may make an effective request, which triggers the lenders obligation to respond. For a request to be effective, it must be made by either: (i) the mortgagor, or any person lawfully authorized to act on behalf of the mortgagor; or (ii) a record title owner of the property, or any person lawfully authorized to act on behalf of the record title owner.
If the request is made by the mortgagor, there is nothing in particular that must be included in the request. On the other hand, if the request is made by a non-mortgagor record title owner of the property, or any person lawfully authorized to act on behalf of the record title owner or mortgagor, then the request must include a copy of the instrument showing title in the property or lawful authorization. This may include, for example, a copy of the deed to the land. Fla. Stat. § 701.04(1)(b)1.
What Must Be Included in The Estoppel Letter?
If the mortgagor, or any person lawfully authorized to act on behalf of the mortgagor, requests an estoppel letter, the letter must include:
(a) An itemization of the principal, interest, and any other charges properly due under or secured by the mortgage; and
(b) Interest on a per-day basis for the unpaid balance. Fla. Stat. § 701.04(1)(a).
If the request for an estoppel letter is made by a non-mortgagor record title owner of the property, or any person lawfully authorized to act on behalf of the record title owner, the estoppel letter only must include the total unpaid balance due under or secured by the mortgage on a per-day basis. The letter may also include an itemization, but it is not required. Fla. Stat. § 701.04(1)(b)2.
When Must The Lender Provide the Estoppel Letter?
Under Florida law, the holder of the mortgage, or servicer of the mortgage, must provide the estoppel letter within 14 days after receipt of the written request. Fla. Stat. § 701.04(1).
However, under Federal law, if the loan is secured by a borrower’s dwelling, the lender must provide the “payoff statement” (same meaning as an estoppel letter) within a reasonable time, but not more than seven business days after receiving a written request from the borrower or any person acting on behalf of the borrower. If the lender is not able to provide the payoff statement in this timeframe because the loan is in bankruptcy or foreclosure, the loan is a reverse mortgage or shared appreciation mortgage, or because of a natural disaster or other similar circumstance, the payoff statement must be provided in a reasonable time. 12 CFR § 1026.36(c)(3).
If a lender receives a request for an estoppel letter or a payoff statement, lenders may be required by both Florida and Federal law to provide the requester with the necessary information. The lender should give the request prompt attention, evaluate whether and when to respond, and deliver a payoff statement with the required information.
- Austin B. Calhoun, Esq.
- Melissa G. Murrin, JD Candidate
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