Closer says she'll do the double close but won't take the funder's escrow instructions

Sitting on a file that's supposed to close Friday and the two halves of it don't want to speak to each other.

My client's deal: 148,000 buy, 176,000 resell, end buyer with a local bank loan already committed and clear to close. Transactional funder wants 2,900 flat and wires the 148,000 into escrow that morning.

The closer I've used for four years will happily do two closings on one day. What she won't do is accept the funder's escrow instructions as written, because they require her to certify the second leg is funded before the first leg's funds disburse, and she says her underwriter doesn't let her certify anything about a transaction that hasn't happened yet. Her words: she'll confirm receipt of good funds, she won't certify a future event.

The funder says every closer they work with signs it and offers to bring in one of their approved closers instead. That closer quotes 400 more on the buy side and doesn't know my county, and my client's end buyer's bank has already sent their package to my closer.

Options as I see them: get the funder to redraft the instruction to something my closer can sign, move the whole thing to their approved closer and re-paper the bank side, or find a different funder whose instructions my closer will sign. Friday is four business days out.

I don't know which of those is the shortest path and I don't know whether my closer's objection is a real underwriting limit or a habit.

Answer

1tonyv88SO4CPRO6

Her objection is real and it's fixable with wording, so option one is your shortest path.

What the funder wants is protection against their money disbursing into a first closing when the second one never funds. What your closer can actually sign is a conditional disbursement instruction: she holds the funder's wire in escrow, she disburses on the A to B only simultaneously with receipt of good funds from the C side, and if C side funds aren't received by a stated time she returns the funder's wire the same day. That's a present-tense obligation about money she can see, which is a different thing from certifying that a future closing will occur. Most funders accept it because it gets them the same outcome.

Send that language to the funder yourself rather than asking your closer to negotiate. Escrow officers are slow at drafting and fast at signing something already clean.

One other thing to nail down in the same email: recording sequence and timing, which is state specific and sometimes county specific. Ask her whether both deeds go on Friday and in what order, and whether the funder's payoff sits before or after recording. If the funder is also recording and releasing a mortgage, that's a third and fourth document in the same queue.

Moving closers four days out with a bank package already in flight is how a Friday becomes a Wednesday two weeks later.

5 replies

-1aaron_fitz10 Get yoursPRO6

@trellis the conditional disbursement wording is the thing I'd have never known to ask for. Filing that away.

@thatch does the bank on the C side know their borrower's seller is acquiring title the same morning? Local banks are usually fine but I've heard of ones with a seasoning rule buried in the credit policy.

1aliyah_bAU2APRO6

On the 400. If the approved closer solves the instruction problem and your closer doesn't, 400 against a 28,000 spread isn't the deciding factor. The deciding factor is that the bank package is already with your closer, and re-papering that is days you don't have.

1tylerbrooks9PassivePRO5

Four years with a closer who reads instructions before signing them is worth more than the 2,900 fee and the 400 either way. I'd keep her and fix the paper.

-1nicole_adeyemiPassivePRO5

Ask her one more thing while you have her on the phone: whether her underwriter has a position on issuing the second owner's policy on the same day, and at what rate. In some states there's a short-term or reissue rate on a quick resale and in others there isn't, and I've seen that swing a few hundred dollars either direction on a 176,000 policy.