No good deed goes unpenalized

Paying off a mortgage, either with one big chunk of cash or with numerous smaller amounts, should be a simple process, said Logan Landers, president of California Mortgage Home Loan Brokers, based in Encino.

To make a single final payment, just contact the loan servicing company that sends out the monthly mortgage statements. It will be able to provide the outstanding balance over the phone and fax those details, Landers said.

On the downside, paying off the mortgage may trigger prepayment penalties. In California, those typically equal six months’ interest if homeowners repay more than 20% of their debt within five years of taking out the mortgage. After that time there is no penalty.

Landers said once the mortgage is paid off, the homeowner receives a document from the lender called a deed of reconveyance that records against the title that the loan has been cleared. He said these are sent automatically but if one does not arrive, it can be requested.

There may be times due to understaffing or some oversight -- or even intentionally, if an unethical company wants to run up fees or not take the loan off its books -- when problems can arise, he said.

“If the consumer feels like they are meeting some resistance, they can turn for help to organizations such as the California Department of Real Estate, the attorney general’s office or the Better Business Bureau,” Landers said.

Carol Scrivner and husband Joe Parker, now both retired after a combined 75 years of working at Caltech in Pasadena, ran into problems when they tried to clear the mortgage on their 1,100-square foot, one-bedroom, one-bathroom home in north San Gabriel.

In July, when Scrivner decided to sell some stocks and repay the mortgage early, she found the 15-year mortgage they took out with Wells Fargo in 1993 had been sold to GMAC Financial Services, a global corporation with interests in automotive, real estate, insurance and commercial finance.

Scrivner said she first had trouble contacting anyone at GMAC. When she did, no one was able to tell her how much she still owed, and then she had to pay $30 for that information. It was October before she could finally repay the outstanding balance of just over $14,000.

“We tried to pay our bills and be decent folks, so this was mind-boggling to us,” she said. “I really felt GMAC didn’t want us to pay it off.”

Brett Weinberg, public relations manager for GMAC, said the company’s automated system “readily provides payoff amounts at no charge,” though if customers prefer a mailed or faxed statement, there’s a standard $30 fee.

“We are reaching out to the customer to make sure the issue is resolved to their satisfaction,” he added.

Scrivner said GMAC has since contacted her and insisted on returning her $30. But, she said, it’s a moot point now and she has sent the money back.

Contradicting suggestions that GMAC deters people from repaying mortgages, two of the company’s subsidiaries -- GMAC Mortgage and Costa Mesa-based mortgage lender Ditech -- offer “equity-rewards” credit cards, on which points are converted to a reduction of mortgage principal.