Reconcile existing obligations with the new loan closing.
A refinance closes only when the old obligation is satisfied on its actual terms and the new lender’s funding and collateral requirements are met. The payoff statement connects those processes. Reconcile the amount, receipt deadline, daily accrual and release responsibilities rather than treating the latest principal balance as the amount to wire.
A historical SEC-filed payoff letter separately addresses payoff amount, receipt cutoff, per diem, release and surviving obligations. It concerns a corporate facility, so its mechanics are illustrative rather than terms for a real estate loan. The calculation below uses invented amounts and dates.
Reconcile the quoted payoff
Assume the existing lender quotes a payoff good through a specified date and cutoff time consisting of $4 million principal, $20,000 accrued interest, a $40,000 exit fee and $5,000 of legal and release costs. Total payoff is $4.065 million.
The new loan is $4.2 million. New-lender fees and closing costs are $80,000, and required reserves are $100,000. Available payoff proceeds are therefore $4.02 million, leaving a $45,000 borrower contribution even though the new loan exceeds old principal by $200,000.
| Item | Amount |
|---|---|
| New gross loan | $4,200,000 |
| New closing costs | −$80,000 |
| New reserves | −$100,000 |
| Net available for old obligation | $4,020,000 |
| Quoted old payoff | $4,065,000 |
| Borrower cash needed | $45,000 |
Verify whether any fees or reserves are already included in another line. The old payoff’s legal costs and the new closing’s legal costs can both be real, but duplicated estimates should be removed through document reconciliation rather than assumption.
Calculate a date change only within the quote’s rules
Suppose the payoff statement specifies $1,000 of additional accrual per day after its good-through date, and the accepted receipt date moves three days later within the quote’s stated validity. Additional payoff is $3,000, making total payoff $4.068 million and required borrower cash $48,000.
Do not derive the per diem from the note rate if the lender has supplied a different contractual payoff calculation requiring explanation. The quote may include fees, default terms, day-count conventions or a limited validity period. Ask the lender to reconcile any discrepancy and obtain an updated statement when required.
Also distinguish sending funds from the lender receiving immediately available funds before its cutoff. A late wire can move the effective payoff date even if the borrower initiated it on the intended day. The closing team should confirm the actual receipt requirements and time zone.
Map release actions to responsible parties
| Action | Responsible party to identify | Evidence of completion |
|---|---|---|
| Issue valid payoff | Existing lender or authorized servicer | Dated statement and scope |
| Confirm final amount/date | Closing team and existing lender | Accepted update or confirmation |
| Receive payoff | Authorized recipient | Receipt confirmation |
| Authorize lien release | Existing lender under applicable documents | Release authorization |
| Prepare/file release documents | Counsel/title or designated party | Executed and recorded/filed evidence as applicable |
| Close cash-management accounts | Relevant banks and parties | Termination or transition confirmation |
A loan balance of zero in a portal is not necessarily the full evidence the new lender needs for collateral clearance. Conversely, recording may occur through a documented post-closing process accepted by the parties. The actual arrangement must be established rather than assumed.
Identify obligations that survive payoff
Review whether guarantees, indemnities, bank services, hedges or other obligations remain after the loan is paid. A payoff letter may release specified obligations while expressly preserving others. Do not describe the entire relationship as terminated unless the documents support that conclusion.
If an interest-rate hedge needs separate termination or assignment, obtain its own settlement and timing. Its value may be payable to or by the borrower and should not be silently netted against the mortgage payoff without an agreed mechanism.
Likewise, an expected refund of old reserves may arrive after closing. If $75,000 is projected to be returned a week later, it does not reduce the $48,000 required at closing unless an accepted settlement arrangement makes those funds available then.
Verify payment instructions independently
The FBI’s real estate fraud guidance recommends a separate verification channel using a trusted contact path. Confirm instructions through the closing team’s established process, particularly when they change. This article provides no account details or actual transfer instruction.
Before funding, reconcile the final settlement version, payoff date, borrower wire and release responsibilities in one checklist. After funding, retain receipt evidence and track outstanding releases and refunds to completion. The payoff is both a cash calculation and a coordinated release process; treating both parts explicitly reduces avoidable last-minute funding and collateral problems.
Sources and evidence
- SEC-filed Scynexis payoff letterPayoff Amount; Wiring Instructions; Termination of Obligations; Lender’s Agreements · Checked 2026-10-21 · One non-CRE corporate payoff illustrates per diem, receipt deadlines and release conditions; its terms and amounts are not generalized.
- FBI — Digital defense against real estate fraudReal estate business-email-compromise precautions; secondary-channel verification · Checked 2026-10-21 · Fraud-prevention guidance; no actual payment instructions, accounts or transfer are provided.
Source dates and applicability matter. Report an error or a changed source.