Service Release Mortgage Fee

We charge a Service Release Mortgage Fee when a loan with a mortgage pays off to cover the filing fees.

Often times the tellers forget to get the fee.

Is it permissible to collect this fee on the front end rather than at pay off?

Allowable fees are a State law issue. If you take it into income, then it will be a finance charge. If you hold it in an escrow account, the balancing of that account is going to be a nightmare. There is still a question as to whether the fee is actually paid to a public official at the time the loan is made - as it might not be for 30 years and who is to say what the charge will be then?

We include it as a part of our origination charge on loans involving a new deed for the reasons Randy outlines above.

RR is correct. If you price your loans accordingly, why mess with all the nickel and dime stuff. I also believe that in some States the burden for the release falls directly on the lender anyway.

I also believe that in some States the burden for the release falls directly on the lender anyway.

That is the case in IN. IC 32-28-1-1,

We used to just collect it when the loan paid off, but if someone gave a payoff statement without the release fee, we just ate the fee.