Not sure why this is just now coming up but here goes...

Let's say we are doing a loan to refinance a mortgage from another bank. Are we to include the mortgage release fee (for the existing mortgage from the other bank) in the Recording Fees section on the Loan Estimate and Closing Disclosure? If so, not sure how to get the numbers to work on the CloD if the other bank gives us a payoff figure that we must pay them that includes release fee. The full amount needs to be made payable to the other bank so there isn't actually a release fee that we itemize separately presently. How are we to treat this?

Do we even need to worry about the lien release of an existing mortgage on our Loan Estimate and Closing Disclosure? It isn't a charge directly related to our loan but releasing the other mortgage is a requirement of getting this loan.

Part of the answer is knowing the practice of lenders involved. In some states, the current lender is obligated to release its lien when it gets a payoff. Some of those lenders may have charged their borrower up front for that lien release fee; others, not wanting to account for such funds over the years, "back-end" the fee and itemize it as a charge in a payoff statement.

In other jurisdictions, the custom is to send the lien release document to the borrower (or new creditor) with instructions to record it (the instructions may include information on the cost of recording).

Let's take the case of a payoff statement from the current lender that itemizes a $50 fee to the County of Nowhere for recording the lien release document, and includes that amount in the total to be paid to the lender. I think that in this case you could issue your payoff check as planned for the full amount, but break it down in your CloD to show the $50 as part of the recording fees, the balance reflected as a payoff to the former lender. The recipient of the recording fee is not provided on the CloD.

In the case of a payoff statement that doesn't include a release recording fee, you'll need to know whether the borrower (or your bank as the new lender) is expected to record the release document. That might take a phone call. If the current lender will record the release at no cost to you or the borrower, there's no recording fee for you to disclose, IMHO. If the current lender's plan is for your bank or the borrower to record the release, you'll have to obtain the cost and plug it into your LE and CloD.

Because the recording of the release is a required element of the refinancing and therefore a condition of obtaining the loan, if you plan for the borrower to pay for it, you have to disclose it.

boy I was hoping for a different answer here. Like the OP, I can see payoffs being shorted by the release fee amount.
If the recipient of the recording fee is not provided on the CloD, why do we have to break it out at all?
What if the release fee isn't the recording fee but rather a cost of preparing the release?
I guess what I'm asking is whether this is an interpretation or a citation.

A loan payoff is a loan payoff - why would you break down any fees included in the pay-off. It might not even be an actual recording fee, it could be a flat fee charged by the current bank as contracted for. The condition of the loan is the pay-off of the current debt. If that include fees - it is still the pay-off.

So you are saying we wouldn't even bother listing a lien release fee when it is typical that it is included with the payoff of the old loan? Just want to make sure I understand correctly!

I would not. The pay-off of the loan is the required event. What fees the other bank charges for that to occur is none of your concern. They may charge all sorts of fees and charges for processing a pay-off under their contact - it is still just a pay-off of the current loan.

If we are refinancing our own loan and the closing is done by a third party settlement agent, do we need to disclose the mortgage release fee as a recording fee, or is it permissible to include that charge in the total payoff? In the previous threads, the question involved payoffs to another institution where the exact fees or charges were not known. If the bank is preparing and filing the release, should we show it as a recording fee? Thank you!

Six of one - half a dozen of the other. The release is really a function of the old loan. I would not go out of my way to separate it out for inclusion in recording fees. The required recording fees to be disclosed are related to the new loan.

37(g)(1) Taxes and other government fees.

1. Recording fees. Recording fees listed under § 1026.37(g)(1) are fees assessed by a government authority to record and index the loan and title documents as required under State or local law.

Thank you so much!