Can a bank sell a loan that you have already paid off?

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Can a bank sell a loan that you have already paid off?

We received a letter from a bank that
we had our truck loan with that they
were selling to a different bank on
18th. We secured financing from our
bank and paid the loan officer to them
on 16th, 2 days before. They sold it
anyway How can they legally sell a
loan they don’t own anymore?

Asked on December 5, 2016 under Business Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Legally, they can't sell it if it was fully paid. Two innocent possibilities present themselves, however:
1) Timing and "battling business units": the sale of your loan had already been in the works by department 1 of the bank (the deparatment that negotiates, executes, etc. sales of loans); your loan was paid off to department 2 (the department that actually services or processes loans) two days earlier, but notice of that did not work its way through the bank's systems from department 2to department 1, which went though with the sale. Contact the bank in this case, discuss what happened, and ask them to correct the situation, so the new bank knows your loan has been paid off. 
2) The payoff amount you had was not quite right and while you though the loan was paid off, there was some balance remaining. If this is the case, get an updated payoff amount from either your existing or the new bank and pay that balance off.


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