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.
Last edited by John Burnett; 05/25/16 02:19 PM.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
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