What is a release of mortgage letter? How do I get a release of mortgage letter from my lender? 

Q: I just read the article regarding the lady that has not received her release of mortgage letter from her lender. If it was my lender, she will not get the release of mortgage until she pays the special release and mail fee. I had to pay $158.50 two years ago to get it.

A: Thanks for your email. The column we wrote talked about the documents you might get once you pay off your home mortgage. Recently, some lenders have failed to send release of mortgage documents to their borrowers that evidence the final payoff of a mortgage.

What is a release of mortgage?

When you apply for a mortgage, you pledge the property as collateral. Lenders then file a lien against the property. In the event you don’t make your monthly payment, the lender can foreclose on the property and sell it to repay the mortgage.

When you finish making the payments owed under the mortgage note, the lender is supposed to release the lien against the property. The lender may send out a final loan statement showing that the borrower has paid off the loan. They may even send out a letter letting the borrower know that the lender received a final payment on the loan and that nothing further is due.

But the lender should also send a document to the borrower or directly to the office that handles the recording or filing of real estate instruments. This document would be called a release of mortgage or release of trust deed.

Do I have to pay for a release of mortgage letter?

You mentioned that you didn’t get the release document. When you contacted your lender, they agreed to send you the document once you paid a fee. Usually this fee covers the recording or filing fee plus a nominal document preparation fee. When you request a payoff letter from your lender, these fees are often included in the quote. However, let’s say you simply end up paying off your loan naturally or send extra money to pay off the loan. Then, the lender may net out your account, close it and show it as paid in full without sending out the release of mortgage letter or document.

For example, in Cook County, Illinois, the cost to record the release fee is $98. Lenders may simply add the $98 fee to the payoff amount and list it on the payoff letter as a line charge. A lender may charge $5 for the release letter while others charge a higher amount. Some lenders even charge owners to wire the mortgage money to them.

If you sell your home and the settlement agent wires the final payoff to the lender, the settlement agent may charge you a fee to wire the funds and the lender you are paying off will charge a second fee to receive the money. 

Read more about release of mortgages

What Documents Do I Get After Paying Off My Mortgage?

Do You Get the Deed After Your Final Mortgage Payment?

How To Track Down Your Mortgage Transfer Records

Does Signing a Quitclaim Release You From Your Mortgage?