Adventures in loan payoff

[Default User BR]

I was about half-way through a 15-year mortgage (refi) that had the once nice rate of 4.875%. Not so good these days, plus less interest so reduced tax deduction. The balance was so low that I couldn't get any significant traction on a new refi unless I took out equity. I did find the low-rate Penfed 60-month home equity loan (https://www.penfed.org/home-equity-loan) that is pretty enticing. The plan was to pay off the original at Wells Fargo and get a HEL in an amount low enough to avoid any fees.

Originally I asked WF how to pay off the loan on-line. "Ha ha! You don't," said they. It seems interest accumulates each (of course) and the system is only allowed (foreshadowing - or so they say) to take regular monthly payments or extra against principal. Hmm. Well, for my purposes, bringing the principal down is good enough, so I made the June payment early, and once that posted sent another payment against the new remaining principal balance. Timed that to happen on the last day of May, so I would be even on interest payments. Then all I would owe would be a flat amount for the recording business.

Such a clever plan. However, the final principal payment didn't post against it. It was transferred all righty, but was in some sort of limbo. So I call up (their email support is usually a waste of time) last Saturday. The guy informs me that I screwed up by paying ALL of the balance. Went something like this:

"How so?"
"We want some left otherwise you might not finish it and we wouldn't get our fee."
"Well, just take the fee out too."
"Can't do that."
"Ok, reverse the whole thing and I'll start again."
"Nope, not that either."
"What! Why not?"
"Because that's our policy."

So that was annoying. Being Saturday, it seemed unlikely to get much action by working up the line. I call again Monday. The woman who I got this time looked at it and said, "They're doing something with it. I'm not sure what. Maybe reversing it." It was afternoon, so she suggested I call back the next day (today).

This morning I decided to check online to see if they'd reversed it. Instead I see:

Outstanding principal balance PD IN FULL

Huh. I look into the transaction details, seems they went ahead and applied the principal payment I'd made (credited back to when I transferred the dough), then pulled another $24 from my checking account for the fee. Technically I hadn't exactly authorized that although I'd suggested it to the the Saturday guy, so I'm not going to complain.

So, temporarily I'm without a mortgage, but remember the Penfed HEL in work, so temper your giddiness. I'll be back in debt before you know it with an even higher monthly payment, but an interest rate less than half. Whee!


Brian

[tfb]

So, temporarily I'm without a mortgage, but remember the Penfed HEL in work, so temper your giddiness. I'll be back in debt before you know it with an even higher monthly payment, but an interest rate less than half. Whee!

Is there any reason PenFed can't help you do the payoff? In my many refi's, the new lender handled the payoff. Besides the annoying $30 payoff statement fee and the necessary but perhaps padded recording fee, it works OK. Your HEL is sort of like a refi, right?

[Default User BR]

Is there any reason PenFed can't help you do the payoff? In my many refi's, the new lender handled the payoff. Besides the annoying $30 payoff statement fee and the necessary but perhaps padded recording fee, it works OK. Your HEL is sort of like a refi, right?

I think you might be right. I already started the application (paid the "qualification" donation, got an account and membership), but after the initial attempt at payoff. I think there was something in there about it. However, I was already off down this trail. I'm also trying to stay away from paying for an appraisal, and including payoff might screw that up.


Brian

[sscritic]

Does PenFed care if they are first or second? In my state, you don't really own your house free and clear until the reconveyance from the previous lender is recorded. The lien is still there, even if the outstanding balance is zero.

For example, if the reconveyance is not properly recorded, when you go to sell your house the title search will show the old mortgage as still outstanding.

[steve r]

Note that a HEL may not be tax deductible if over 100,000
Because this is a HEL I believe HEL "must" send you the check. They will not take care of such paperwork.

I had a somewhat similar issue ... I am aggressively paying off mortgage ... wanted to refi $100,000 with PennFed's and keep the rest of my 1st mortgage. I could not arrange it to have them pay down my 1st mortgage ... long story, but it meant I would need an appraisal ... (appraisal waived if LTV < 60%) ... which reduced the benefit of the HEL ... so I dropped the idea. I have a good rate anyway.

[Mrxyz]

Hi

I am in process of getting the PenFed HEL to 'replace' my first mortgage by paying it off. I am under the impression that PenFed will send check to my first mortgage bank. Is that true? Or do I have to pay the bank myself after I get the check from PenFed?

[zeusrock1]

Just paid my Wells Fargo mortgage with a PenFed HEL. In my case, I stated that I wanted to payoff the mortgage completely using the HEL. I took a HEL slightly higher than my existing mortgage and PenFed paid off the WF directly, it was a very easy process. Just had my first months payment withdrawn, only 59 more payments!

[Default User BR]

Note that a HEL may not be tax deductible if over 100,000

I'm well under that.


Brian

[Default User BR]

I had a somewhat similar issue ... I am aggressively paying off mortgage ... wanted to refi $100,000 with PennFed's and keep the rest of my 1st mortgage. I could not arrange it to have them pay down my 1st mortgage ... long story, but it meant I would need an appraisal ... (appraisal waived if LTV < 60%) ... which reduced the benefit of the HEL ... so I dropped the idea. I have a good rate anyway.

Yeah, looks like I could have done that. I didn't really think an HEL could act like a refi. I had some cash from a recent inheritance and a short dip into reserves, so no big deal doing it this way. I haven't completed the Penfed application, although it's to the point where they have already pulled a credit report and score. It seems they use Equifax scores rather than FICO. My score was 865 on that scale (150 - 950). I don't know how that maps to a FICO.


Brian

[livesoft]

WF was servicing my mortgage. When I paid it off, I went online and got the "payoff quote" for a specific date. I printed out the form, then went to the nearest WF bank on that date, and said, "I have this pay off form and wish to wire money to pay off my mortgage now." They filled out a wire transfer and did not charge me any fees at all including the wire-transfer fee. "PD IN FULL" appeared on the account the next day and for months thereafter.

I think I got some free cookies, too.

[Default User BR]

WF was servicing my mortgage. When I paid it off, I went online and got the "payoff quote" for a specific date. I printed out the form, then went to the nearest WF bank on that date, and said, "I have this pay off form and wish to wire money to pay off my mortgage now." They filled out a wire transfer and did not charge me any fees at all including the wire-transfer fee. "PD IN FULL" appeared on the account the next day and for months thereafter.

We don't have local branches, although the WF presence locally has increased. At any rate, they figured it out.

I think I got some free cookies, too.

Another downside of doing things online, the only cookies you get are the kind you can't eat.


Brian

[sscritic]

WF was servicing my mortgage. When I paid it off, I went online and got the "payoff quote" for a specific date. I printed out the form, then went to the nearest WF bank on that date, and said, "I have this pay off form and wish to wire money to pay off my mortgage now." They filled out a wire transfer and did not charge me any fees at all including the wire-transfer fee. "PD IN FULL" appeared on the account the next day and for months thereafter.

I paid mine off years ago (pre-everything-is-on-the-net) in a similar fashion, but using the US mail. I got a payoff amount by phone from my lender as of a certain date. I sent them a check to arrive around that date. I think they even gave me a four day window to get the check to them. All I know is that I followed their instructions, and it worked. I also got my reconveyance, but that was several months later.

[SimonJester]

Any one know if WF will send you your signed note after payoff or do you have to request it? My county says they send the note back to the lender and recording the release of deed of trust...

[sscritic]

Any one know if WF will send you your signed note after payoff or do you have to request it? My county says they send the note back to the lender and recording the release of deed of trust...

Did you mean after? What you call the "release of deed of trust" is the reconveyance I have been writing about. The trustee holding your deed of trust will actually appoint a successor trustee who handles the recording of the reconveyance, so the reconveyance doesn't come from the original trustee, but from this successor trustee that handles the reconveyance.

In some states, lenders reconvey a mortgage by using a Satisfaction of Mortgage document, according to the Mortgage Insider website. In others, including California, the document is a Deed of Reconveyance. The process is referred to as reconveying a mortgage, even in states such as California, where the lien is secured by a deed of trust rather than a mortgage.

A deed of reconveyance includes such information as the name of the lender and borrower, the address and legal identification of the property, the size of the loan, the date it was recorded and where in the county records it can be found. In a trust deed state, the reconveyance form will also identify the trustee, who holds the title to the property for safekeeping.

Once the loan is paid off, the lender has an obligation to reconvey the mortgage or trust deed in a timely fashion. In California, for example, the Dirt Law real estate blog states, the lender has 30 days to deliver the original promissory note and deed of trust to the trustee, along with a request for reconveyance. The trustee has 21 days to record the reconveyance with the county government.

If you don't live in CA, you have to look for the laws in your state.

[Tyrobi]

Hi

I am in process of getting the PenFed HEL to 'replace' my first mortgage by paying it off. I am under the impression that PenFed will send check to my first mortgage bank. Is that true? Or do I have to pay the bank myself after I get the check from PenFed?

PenFed will send you the check. So you will have to pay your first mortgage yourself.

In my case, I have PenFed to directly deposit into my PenFed Share account before paying off my mortgage instead of mailing since it's quicker and safer. I'm now mortgage free, except the 1.99% HEL.

[Mrxyz]

Hi

I am in process of getting the PenFed HEL to 'replace' my first mortgage by paying it off. I am under the impression that PenFed will send check to my first mortgage bank. Is that true? Or do I have to pay the bank myself after I get the check from PenFed?

PenFed will send you the check. So you will have to pay your first mortgage yourself.

In my case, I have PenFed to directly deposit into my PenFed Share account before paying off my mortgage instead of mailing since it's quicker and safer. I'm now mortgage free, except the 1.99% HEL.

Thanks for the info.
I will also ask them to deposit into my PenFed account and then transfer funds between the 2 banks, which should be 'easier' and quicker.

[Default User BR]

Update -

The glacial pace at PenFed is nearing its conclusion. They have finally been satisfied with the documents and such, and are sending closing documents for me to sign and get notarized. So a bit less than Taylor's six months for a refinance. Part of that was the confusion with the old loan payoff and my procrasinatory (is that a word?) nature. Had I been speedier about sending requested documents and keeping on them about it, I'm sure I'd have shaved it by a month or so.

But it's moving along. Yay.


Brian

[jared]

Dang. When I clicked on the title of this thread, I thought I would find the sequel to viewtopic.php?f=2&t=104780

[Default User BR]

Update -

The glacial pace at PenFed is nearing its conclusion. They have finally been satisfied with the documents and such, and are sending closing documents for me to sign and get notarized.

Paperwork arrived on schedule. I went to the bank to get it notarized. I was a little hesitant about that as I wasn't sure if they would object to providing free notary service for another institution's loan paperwork, so I called ahead. The rep said that they understand these things and it would be no problem. The banker went through the paperwork and checked everything as we signed and notarized. Yay USBank. She asked me what rate I got, and when I told her she said, "That's very good, we couldn't touch that."

Sent the papers back by return UPS Saturday. I instructed PenFed just to put the funds into the savings account they make you get. Should be soon.


Brian

[johnny72]

Hopefully you don't plan on ACHing the money out of PenFed's savings account. It has a $5,000 limit per day if I remember correctly.

[Default User BR]

No email or other notice from them yet, but the money showed up today. Rah.


Brian