Welcome to the forum and thank you for joining...
First off the refinance offer is to take out the amount owed to the lender, Saxon and the investors, at this point let's lump them together for the sake of consistency. Somewhere along the line the information that someone provided is either inconsistent or entirely wrong. The full principle balance must be paid off with any interest arrearage, fees, charges, etc..that is the normal usual, customary method of payoff with any loan whether delinquent or current. If you were 4 months behind, there would be four months interest in addition to the principle owing, and late charges.....etc...is there a prepayment penalty, if so these are hard prepayment penalties and as such they are required in the payoff as well. NO WHERE are they allowed to just add $$$ to the balance in order to staunch the hemorrhaging of their bottom line and profits, however. However, Saxon is not the brightest kid on the block and someone may have explained this poorly to you and at this point I will give them the benefit of doubt.
What ever the situation is, you need a clean clear concise payoff letter form Saxon to determine just what they say you owe and how that breaks out. The party refinancing your loan should ask for that letter and should within 24 hours have it. It is a common and easy thing to obtain. It appears that the refinance loan is less than the balance owed and there is a reluctance on the part of Saxon/Investor to take a hair cut, i.e. less than what they assume they are owed. Now to the part where they do not want to allow payoff of the actual balance owed, well, if that is the CASE, RESPA violations abound.....BIG ONES.....
You need to immediately do not pass go contact FTC, they are on the Web and have a very cozy discussion with them if that is the case. This is huge servicing abuse. HUGE. Now having said that the CSR that you spoke to is most likely an idiot and was so misinformed that the servicing gods are going to rain down on his/her head. If a borrower is ready, willing and able to pay the amount owed in full they can not refuse the payoff......!!!!!!
So here is the issue, if the amount that you have to payoff the debt with Saxon is less than what is owed, balance, fees (late), legal and interest, YES they have the right to refuse it, and most assuredly will. They are not taking principle reductions at this point in this mess. If the amount that you have available is enough to payoff the full balance owing they can not refuse.
You can not bring action against them for refusing less unless you have egregious violations of RESPA, TIL, Reg Z and even then often the best you can hope for is work out and modification since you have some teeth. They are NOT, taking less these days, not yet. They can refuse a short payoff offer and frankly will every time.
No you can not get anywhere directly with the investors, they have billions of loan dollars lumped together and could not sort you out from the next guy, their decisions are predicated on the information and recommendation of the Servicer and those are really the only people you can communicate with. As for the investor, it may be more than one....these were sliced and diced and sold out in CDO's and trusts...who knows how many ways the pie was sliced.
You are working with good people, however, they should know that is the case that the Servicers/Investors are not taking short payoffs and have not to date and if so, I want to know who is so that I can assist folks with that servicer. Finally if the amount that is being offered to them is the full amount owed, and they are refusing, then you need to immediately go to FTC..., however if it is not the full amount owing then the Servicer/Investor has the right to refuse the offer.
Continue with the Modification Process and have the PA financing folks get to the bottom of this, you have taken very proactive measures to protect yourselves, however the posting needs to define the terms that the PA financing is offering so that I can ascertain if the payoff is complete, ie all monies owed to date.
If you are questioning the amount owed, please do not hesitate to execute a QWR so that you can determine if there are violations in the fees and charges that are being added to your loan as well. That has and can be the case.
QWR -- there are examples of the letter in the Tool Box. In that letter demand your Life of Loan History, copy of Note, Deed of Trust, Riders, all Assignments of the Deed of Trust, TIL, Right of Rescission (if refi), Lender Final HUD-1, copy of initial loan application and final lender loan application, all disclosures and all loan documents in your file, copy of appraisal. Send this three times certified return receipt required and also send it to the Broker, Title Company and all others in the Chain of the Transaction.
This thread has a really good example:
My Countrywide escapade and Hi!