I had something similar happen, except the bank didn't have the original paperwork. All they had was a note on the computer that they had written the loan off 5 years before.
Now I know I sent in the final payment, but didn't notice that I didn't get the title within 60 days. (Or however long it's supposed to take.) I actually had to pay the bank over $300 in past-due fees -- for an allegedly short principal, the amount of which they couldn't look up -- just so I could give the damn thing away.I would have told them to go ahead and take it back, but the guy I thought I was selling it to left it on the street without license plates and it got towed. The city was charging me $35/night storage fees. And since I didn't have the title, and couldn't transfer the registration, the idiot who left it out to get towed told me that I could take it back. Prick.