Why is the payoff on the old loan higher than the principal balance?
The borrower may have an escrow shortage with the current lender, which needs to be paid. Also, since the old loan is probably paid in arrears, the lender will add interest from the first day of the month in which the loan is paid off through the actual date of the payoff. Finally, if the old loan is relatively new and it is paid in arrears, the borrower will have paid down only a small portion of the principal. The additional interest paid in arrears can actually make is seem as though one is paying off more than one borrowed.