In the Unfair, Deceptive, and abusive act web based training. It says not releasing a lien when a loan has been paid in full is an unfair act.

However, it has come up a few times where it says in the loan documents that the client must pay for the cost to release the lien and they have refused.

Can we withhold the release of the lien until they pay our attorney costs (as required by the loan documents)?


Also, would this be considered a UDAAP issue if the customer was told that they must pay for the cost to release the lien and the customer refused? Any recommendations? Thanks

It seems weird to me that you wouldn't just build this cost into the cost of the loan. Save yourself and you customers the trouble in the future and make this avoidable issue go away. That said, if you properly disclosed it, I am not sure how it could be considered UDAAP.

I would just build it into the cost of the loan. Despite the disclosures, I can easily see one of the more aggressive regulators saying this is a UDAAP.

You may want to check your state law. In some states the lender must satisfy the lien, and since you are referring to release fees I will assume you are talking mortgages, regardless if they collected the release fee from the borrower. So it very well could be both a UDAAP and a State Law violation.

In IN you have 15 days to release the lien once you receive the request to do so - you can be fined up to $500 for not doing so and the FI must file the release to satisfy the lien - IC 32-28-1-2.