Can anyone tell me where to go to find information on charging the customer for the filing of a release of mortgage?? In the past, we have not been able to charge the customer for this fee. But, someone recently told me that has changed.

This is most likely a matter of state law. In Michigan, the bank must pay to record the release.

State law is your answer. In MA we charge the borrower for the cost of filing the mortgage discharge by adding it to the loan payoff statement. In the past we would send the discharge to the borrower, but they quite often would not record it and then we'd get asked for a new discharge years later.

You need to explore five issues, all of which are controlled by state law (although there is an argument that state law is preempted for federal savings savings associations as to the first two issues - discuss this with your attorney):

1. Does state law allow you to pass on to the borrower the cost of recording the discharge?

2. Does state law allow you to charge a reasonable fee to the borrower for preparing the discharge document?

3. Do state law and/or attorney ethics rules require that you retain an attorney to prepare the discharge document?

4. Does state law require an actual written signature (as opposed to a signature stamp) on the discharge?

5. How long do we have to prepare and/or record a discharge after the loan is paid off?

The answers under Michigan law are:

1. no.

2. no.

3. no.

4. yes.

5. 90 days after payoff, or 7 days after the borrower asks for the discharge. See M.C.L. 565.41 and M.C.L. 565.44 .

Good luck in obtaining answers for the other 49 states and US territories. I suggest that you take a little survey here and maybe get a good start on finding your answers.

In a previous incarnation as a closing officer, I got payoffs from national investor banks (ex. Chase or Principal) that included both fax fees and satisfaction fees. Are you saying that they did NOT use a flat fee but only what the state the property was in would allow?

My present employer does loans in several states and we're looking to collect the recording fee for the satisfaction... so it actually does get recorded.

I have always wondered from an accounting standpoint also, if a bank would be allowed to take this money into income and then expense it 30 years from now and not hold it in some type of escrow account. It is after all, in theory reserved for a future event for the benefit of the customer and would not really be the banks money. Not to mention whether or not these charges can be actually excluded from the finance charge. The OSC states that sums must be actually paid to public officials to be excluded from the finance charge under Sec. 226.4(e). Whether or not these funds are actually paid to a public official may not be actually known for 30 years??

We don't want to collect the fee at time of closing. We're looking to include the fee with the payoff and turn around and use the $$ immediately.

My question is, do we have to have a state specific fee or can we just use a flat fee?