Hazards of the Escrow Desk
A Novella Titled – “Do Lenders Really Know What They Are Doing?”
There are days you just want to shoot yourself and be done with it.
Here’s the transaction – This is a refinance escrow of a small 4 unit residential income property. It took over 6 months to get to a point where loan documents could be drawn.
Only Party A is refinancing and he will be the sole Borrower.
Party B will NOT be a borrower, so he will not sign the Promissory Note but he will sign the Deed of Trust and have it notarized.
Party A is in Los Angeles.
Party B is in the State of Maine. The Lender is fully aware of the location of all parties.
Loan Officer gives assurances to Party B – Not to worry, you will only have to sign a couple of documents, have them notarized and then sent back to Escrow. This won’t affect you at all.
Loan Officer to Escrow – the documents will be issued on Feb. 10. However, they cannot be signed until Feb. 13. Get them signed on that day, and we will also fund the loan that same day.
Feb. 10 (Friday)
Escrow to Lender – “Where are my documents? I need to e-mail them to Party B so that he can sign it on Monday.”
Finally! The loan docs arrive by e-mail. Escrow reviews and finds that Party B’s name shows on the Promissory Note.
Big error! Party B IS NOT a Borrower and should only be signing the Deed of Trust! Escrow calls the document department but they are in Texas and they are gone for the day.
What to do?
The documents have to be sent out! Should we send the Promissory Note even though it is not correct?
Feb. 11 (Saturday)
If this is going to work Escrow must get out the documents to Party B in Maine during the weekend. Escrow makes the decision NOT to send the incorrect Promissory Note.
Escrow e-mails the Deed of Trust to Party B with specific instructions on where to sign and where to have Notary Public sign and how to send back.
Escrow gives Party B a cell number in case there are questions. Maine is on the verge of a huge snowstorm.
Feb. 12 (Sunday) 2:00 p.m. PST
Party B calls Escrow. “We are in a middle of a snowstorm right now but I found a notary at a UPS store who can help me.
I am going to get it signed right away because we don’t know how badly the storm will affect services on Monday!”
Escrow to Party B. “No, no, you can’t sign yet. The documents are dated for Monday Feb. 13 and you have to sign on that date.
Sign it on Monday and immediately overnight it to us.”
Feb. 13 (Monday)
Party B sends Escrow an e-mail. The storm is going full blast but docs are signed and on its way! We should get it by 10:30 a.m. on Tuesday.
12:00 noon – It’s pouring rain in L.A. but Party A comes in to sign his set of documents, including the incorrect Promissory Note that still has Party B’s name on it. There was no response all morning from the document department in Texas.
3:00 p.m. – Party A has already left but Escrow gets the revised Promissory Note with only Party A’s name. Escrow calls Party A to come back in to re-sign that one document.
Feb. 14 (Tuesday)
10:30 a.m. – Where are Party B’s documents? Did the snow storm hold it up? No, UPS tracking said the package had arrived in Baldwin Park.
11:30 a.m. – no sign of UPS with Party B’s documents
1:30 p.m. – still no sign. Escrow calls UPS again. Where is the package?? Baldwin Park is only 20 minutes away from us! Apparently, the driver had issues. They are sending another driver to complete the route.
3:30 p.m. – the package finally arrives. Unfortunately, it is too late to send out for closing the next morning.
Escrow calls Lender. Here is the gist of the conversation:
“Sorry, the package from Party B just got here. We can’t record on Wednesday, we have to record and close on Thursday. What? You already funded the loan?? But no one called me to verify that all documents were signed and received! You didn’t wait until I sent you confirmation? Don’t you want to know that your documents are signed before you send out the funds? ” Escrow Officer is exasperated with this incompetent Lender.
Feb. 16 (Thursday)
Documents recorded , escrow is closed. The original loan documents are overnighted to Lender.
Feb. 24 (Friday)
Escrow gets an e-mail from the Lender. After their review of the documents they see that the Deed of Trust was signed incorrectly.
Party A and Party B should have signed on the same page. They could not sign in counterpart. Escrow is flabbergasted,
“What?? You told us the documents had to be signed on Feb. 13. You knew Party A was in L.A. and Party B was in Maine. How did you expect the signing to be done if not in counterpart?”
No matter how it was argued, the Lender was adamant.
Re-sign and re-record they said.
So the document was sent back to Party B to re- sign, and then Party A signed on the same page after it was returned.
But that’s where it stopped. The document has not recorded. Escrow Officer advised the Lender that this new Deed of Trust would not record until the Lender issued a Release for the old Deed of Trust.
If not the client would end up with two loans on property. Escrow Officer is still waiting….
A facetious question here, “Do you think the Lender knows what they are doing?”
WHY IS HOME OWNERSHIP SO TOUGH?
According to the National Association of Realtors and described in this article there are a number of factors that are preventing the Millennials and other non-homeowners from achieving their American Dream.
These factors are simple:
(2) student loan debt
(3) perception of downpayment required.
Even with overseas investors dropping out of the picture, prices in certain popular areas are still at grin and bear it values.
Will the market soften?
Not when multiple offers and overbidding is still the norm.
I had one transaction in my area listed at $798,000 which sold at $840,000.
A look at the condition of the property on Trulia had us dropping our jaws. I probably would have paid maximum $600,000.
But hey, I’m just the Escrow lady.
There may be no pain yet for the Sellers at the mid range levels but the pain is creeping in where high priced luxury property values are concerned.
Have you seen this recent LA Times article yet? Be amazed.
Is the traditional 20% down necessary?
More young people are taking advantage of minimum down and government sponsored loans. 3%, 5% down will leave you that little extra for painting and enhancements.
This is not the time to think traditional.
Here is an interesting statistic however. A comparison between our market and Canada’s market shows one distinct (and costly) difference.
Whereas U.S. first time home buyers try to put minimum down, preferably 3% or less, in Canada the downpayment for the Millennials can be as high as 23% according to this article.
But are their prices commensurate to ours?
Ah Ha! Therein lies the difference!
Let’s talk about student loan debt. Or maybe not. Yes, well, President Trump isn’t talking about it either. Big problem here.
There are approximately 44 million people with student loans for a total of $1.28 trillion.
How far does he think the economy will go when student debt is holding back the upcoming backbone of our economy – the Millennials?
Back to the question, homeownership is tough because it is unaffordable to those who have too much debt and not enough cash saved aside. There. One sentence.
CFPB COMPLAINTS SUMMARY AND CHARTS:
CFPB is all about transparency, right?
This government agency which is under tremendous fire and scrutiny has come out with statistics to substantiate their claim that they are doing good for the consumer.
Statistics on their complaint site state 25% of the complaints received are mortgage related. Imagine that.
There is also a breakdown of the types of mortgage complaints and a list by company. And the Oscar for the Most Complaints goes to.
Wells, Wells, Wells! Woo hoo! I would never have guessed.
WELLS, WELLS, WELLS – A SMALL FOLLOW UP STORY:
I am happy to report that Wells has finally fired 4 executives for the fake account scandal and none will receive a bonus for 2016.
In addition, they have asked eight of their top senior executives to return cash bonuses that they received. Finally we are talking.
Not only that, this article also reports that there may have been even more than the 2 million fake accounts issued than previously thought.
Even I am wondering where and when does it all end?
WHERE HAVE ALL THE MONEYS GONE?
For the everyday consumer who gets scammed and lost money, where does the money all go?
The Federal Trade Commission tells us how to spot imposters who want to separate you from your money.
One tip: the federal government will never call you for money, even to balance their budget. That, my friend, is a dead give away, pun intended!
VR – IT’S NOT JUST FOR GAMERS OR TECH GEEKS
If your international client does not have those silly monetary constraints which prevents them from shipping out money whenever and wherever they want and if they just can’t physically get away from making those billions to come to the U.S. and view the house, the smart and intrepid real estate agent should look outside the box by gearing up towards the next technological advance – the virtual reality sale with the base article titled “how to sell a $57 million mansion.”
This, my friends, is the way of the future. And guess when the future is?
Does that real estate agent really need to spend $10K to do such a video?
No, with a little creativity, imagination and maybe a teenager with a smartphone in tow, you can create your own simple but effective video and submit it up to WeChat or Line.
The future is NOW!
I will be going to Washington D.C. in the next few weeks to petition our Congressional representatives to reduce federal legislation on our escrow industry.
My industry organization has been pushing for this regulatory respite for years, and with the new Administration and Congress, we stand a much better chance to get this done now as they fiddle around with the Dodd Frank Act.
Hopefully I will have some Capitol insights to share in my next newsletter!
In honor of my going on my once a year trek to D.C. I have this comment to offer:
“The reason Politicians try so hard to get re-elected is that they would hate to have to make a living under the laws they’ve passed.”