Can the Loan Servicer Refuse to Provide You with a Payoff Balance Statement within 7 Days?

Generally, no. Federal rules require the company that services or owns your mortgage to send an accurate payoff statement within 7 business days after it receives your written request. It can take longer only in a few situations, such as when the loan is in bankruptcy or foreclosure, a natural disaster disrupts the servicer, or you did not follow its instructions for payoff requests.

How do you request a payoff statement?

1. Find your servicer's payoff request instructions. Servicers can require payoff requests to go to a specific mailing address, email address, or fax number. Check your monthly statement or the servicer's website, or call the customer service number.
2. Make the request in writing. The 7-business-day deadline runs from a written request. A letter, email, fax, or online request sent the way your servicer specifies works. If you ask for a payoff by phone, follow up with a written request anyway, because the federal deadline runs only from a written request.
3. Include the details the servicer needs: your name, loan number, property address, and the date you expect to pay off the loan. The statement shows the total due as of a specified date.
4. Authorize anyone requesting on your behalf. A title company, closing attorney, or new lender can request the statement for you. The servicer may verify that person's authority before its deadline starts, so sign any authorization form early.
5. Keep proof of when the servicer received the request, such as an email confirmation, fax receipt, or tracking number.

The rule applies to any consumer loan secured by your home, including a home equity line of credit (HELOC) and a loan on a second home. There is no exemption for small servicers. A lender or investor that no longer owns your loan or its servicing rights does not have to respond, so send the request to your current servicer.

How long does the servicer have to respond?

The servicer must send the statement within a reasonable time and no later than 7 business days after it receives your written request. For this rule, a business day is a day the servicer's offices are open to the public for substantially all of its business. If your servicer is open every weekday, a request it receives on a Monday must be answered by Wednesday of the following week.

That deadline matters most when you are selling or refinancing, because the closing agent needs the payoff figure to prepare the settlement statement. Since 7 business days can stretch to 9 or more calendar days, send the request well before your closing date. What it means to refinance explains how the new loan pays off the old one at closing.

When can the servicer take longer than 7 business days?

Federal rules allow a "reasonable time" instead of 7 business days only when the servicer cannot meet the deadline because:

• the loan is in bankruptcy;
• the loan is in foreclosure;
• the loan is a reverse mortgage (a loan for older homeowners that is repaid when the home is sold or the borrower leaves);
• the loan is a shared appreciation mortgage (a loan where the lender receives part of any increase in the home's value);
• a natural disaster or a similar event prevents it.

The CFPB's official commentary adds one more case: if you did not follow the servicer's stated instructions for payoff requests, a longer response time is reasonable.

The rules do not define "reasonable time" in days. In none of these cases can the servicer refuse to provide a statement altogether. If yours is delayed for one of these reasons, ask the servicer in writing for an expected date.

What does the payoff statement show?

The payoff statement must give an accurate total of what you would need to pay to satisfy the loan in full as of a specified date, and it must be accurate when the servicer issues it. According to the CFPB, the payoff amount includes:

• the remaining principal balance;
• interest due through the day you plan to pay off the loan;
• fees you have been charged but have not paid;
• a prepayment penalty, if your loan has one. Check your note and any "Addendum to the Note" for this.

If the statement does not list the daily interest amount (often called per diem interest) or payment instructions, ask for both. You need the daily amount if your payoff date moves past the date on the statement.

Why is the payoff amount different from your principal balance?

The principal balance on your monthly statement does not include interest that has built up since your last payment or any unpaid fees. Interest accrues daily, so the payoff amount adds interest up to the payoff date.

Example: Your principal balance is $250,000 at a 6% rate. Daily interest is about $41.10 ($250,000 x 0.06 / 365). If 20 days of unpaid interest have built up by your payoff date, the payoff amount adds about $822 ($41.10 x 20) to the principal, plus any unpaid fees. Servicers calculate daily interest in different ways, so use the figure on your payoff statement.

Your escrow account balance can reduce what you owe. Federal rules let the servicer apply remaining escrow money against your loan balance, so check whether your payoff statement does this. Any escrow money left after the loan is paid in full must be returned to you within 20 business days. If you refinance with the same lender, the loan's owner, or the same servicer, you can agree to have the balance moved into the new loan's escrow account instead.

To lower your balance before a payoff, see how to make extra payments so the money goes to principal.

What if the statement is late or wrong?

1. Put the problem in a written notice of error and send it to your servicer's error-resolution address. Failing to provide an accurate payoff balance on request is a covered error, and the servicer must correct it or explain in writing why there was no error within 7 days, not counting weekends and federal holidays.
2. File a complaint with the CFPB at consumerfinance.gov/complaint or (855) 411-2372 if the servicer still does not respond.

Rules for written communication with servicers explains how to send that notice, and the prompt payment crediting rule covers how your regular payments must be posted. What loan servicing is covers the servicer's role from closing to payoff.