Adventures in Consumer Financial Protection

Ian Ayres

My family took out a mortgage from CitiMortgage to buy our house and at various times we have been prepaying some of the outstanding balance.  A few weeks ago, we decided we wanted to pay off the entire loan.  Cenlar is the administrator for the loan and there are several potential legal problems with their platform and business practices:

1.     Their site offers no ready option to pay off a loan or to generate a payoff statement that tell you how much you would need to pay or how to pay off the loan. 

2.     The site doesn’t allow you to prepay all of your outstanding balance.  You must keep at least a penny outstanding on your loan.  I paid off this maximum amount.

Do these first two restrictions violate CFPB’s prohibition on prepayment penalties?

3.     The site now reports that our outstanding balance is one cent, but that our monthly payment of thousands of dollars is past due -- still with no indication of how we can pay off the loan and lift the mark on our home’s title.

4.     Yesterday, I received in the mail a Payoff Statement with an effective date of Feb. 10, 2021.  In the statement, it says in addition to our present principal balance of one cent that we also owe a recording fee of $60.  It also says that Cenlar will not accept personal checks or online payments as methods of remittance, but that we must make this final payment of $60.01 via bank wire, certified check, cashier’s check or attorney’s trust check.  It also says if we fail to pay by 3-26-21 “a late charge of $351.33” will be charged.

In the absence of a prior mortgagor promise, does a mortgagee has a duty to remove its claim on property when a loan is paid off?  Also in the absence of agreement, are there limits on a loan administrator’s ability to restrict the means by which mortgagor’s pay off their loans? And finally, can a lender charge a late fee of $351.33 on an outstanding loan balance of $0.01 (or on their claimed payoff amount of $60.01)?