can my friend/lender block my refinance because he thinks I owe him more money?
2 Answers from Attorneys
The process of refinancing a loan (I assume we're talking about a real estate loan secured by a note and deed of trust under California law) involves the new lender (or the borrower) making a request for a payoff demand from the old lender. See Civil Code section 2943, especially subpart 2943(a)(4). The old lender is entitled to demand payoff for all sums then due under the old note and deed of trust. He/she/it is NOT entitled to demand payment of items not covered by the old note and deed of trust. Any attempt to shake down the borrower for side loans, or money he won from you in last week's football betting, could be an attempt at fraud. However, an honest claim for additional sums that may have become due under the terms of the old loan is completely proper.