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It does sound crazy, some lenders will go by their credit report, which can be 2 months out of date, and then the weight of proof to evidence things have been cleared is the applicants.
If it still shows on your credit report as outstanding, and you have a large payment going out that can be seen on bank statements, the lender might be concerned that your outgoings are far in excess of what you have told them.
If commitments are recently paid off, which many people do before applying for a mortgage, quite a few lenders will reduce your borrowing, and won't care that you've cleared them or intend to clear them.
Acliff
@Stonehedge
We almost had our application declined because my wife paid off her credit card early by bank transfer two months ago. Madness.