I had an amazing experience which I just have to share…the positive point is that  the buyer did wind up with her home but it was under the brunt of stress that was unnecessary.   You see, sometimes when things begin to go wrong in a transaction, fingers will waive and point vigorously undeservedly.   People will want to remain shiny, positive and virtuous to their referral provider and will therefor, throw someone "under a bus" or "into a train".  I was recently almost thrown and I spared myself fighting all the way.

We had loan documents to the escrow company just over a week prior to closing (still pretty darn good)…no HUD-1 from the escrow company until a day before the buyer was signing (after many request for an estimated HUD-1.  I want to review them to make sure my closing costs from the Good Faith Estimate are in line with the Estimated HUD-1 Settlement Statement).   

The client signs two days before closing and I assume all is well until I receive a panicked call from the home buyer on closing day stating that we are not closing.  She’s very upset because she has learned from the Listing Agent and the Escrow Company that her purchase is not funding because my company released it too late.  This is a total surprise to me since our office did fund on the transaction.

My first step, after calling my client to let her know that I’m "on it" and that this is news to me (because escrow NEVER called me) is to call escrow and find out "what’s up".  At this point, it’s 4ish in the afternoon and there are no more new recordings taking place at the county. 

The Escrow Officer is schmoozy and tells me that we (the mortgage company) released the recording a little late which made it difficult for the title company to get documents to the county.  I let the EO know that previous to lending, I was in the title industry where my career began with recording documents and ended with managing an escrow branch.  The EO had days (a week) to sign the client and provide documents to the title company for recording…yet she’s still trying to pin the blame on the mortgage company.  We, in fact, have emails to the escrow officer confirming she has our wire and she’s okay at proceed with recording. 

Although this EO returns our funding package two days before closing (thanks to how many days in advance we provided the loan package to her) yet waits until the day of closing to send the loan documents to the title company.   She tried to tell me that we released too late at 2pm when I know that the county courthouse will take recordings until 3:30.  I’ve done many "walk on’s" myself way back "in the day".  Regardless, she and/or the title company could have had the documents to the court house MUCH earlier.

I only learned about the recording mishap only because my client called me ready to rip my face off since she was told this was the fault of lender when it was anything but the case. 

The escrow officer and title company are lucky that I’m not naming them.  I’m not one to bash (although check back if this happens again)!   As someone who was in the title and escrow industry for so many years, there is no way that I would have unjustly thrown someone "under the train" and I find it extremely concerning that the only way we learned about recording/closing issues was from the buyer.  If the buyer had not called us late in the day, we would have had NO idea that the loan we funded on did not record.  Why didn’t the Escrow Officer contact us?  A short staff is no excuse for not contacting the mortgage company (when the EO did communicate with the buyer and agents).  In fact, there is no excuse.

How did this wind up?  The title and escrow company have both since admitted fault.  The title company is going to indemnify the transaction as if it had closed on the day it should have.  And the buyer did get her keys to her new home.

What happened to working together?  I don’t remember throwing Mortgage Professionals under the train or bus like I’ve witnessed recently–are EO’s so afraid of losing business they’ll make a sacrifice play to impress their agents?

NOTE: My preferred title and escrow company contacted me concerned this could appear as if it where one of their Escrow Officers that "threw me off the train".  Without naming names, this was a different company. 

EDITORS NOTE:  This post has been updated here.   With all the changes HUD created with the 2010 Good Faith Estimate, they are no longer a practical tool for mortgage originators and actually, no where on the GFE is there a place showing "funds for closing".   Please skip this post and read the one linked above.

Your closing date on your new home is a couple of days away, your feeling a little case of the jitters…the last thing you want to deal with is to be surprised with what funds are due at your signing appointment with the escrow company.   

Here's how you can clear up the funds to close issue:

1. Your Mortgage Professional should provide you with a "fine tuned" Good Faith Estimate 5 or more business days before closing for review.   Check out the amount due for closing and if you are being credited for the earnest money deposit and any funds you have provided to the lender.   Also verify if any credits to you are reflected by the seller.   If you are unsure at all, ask–don't assume.   This is the best time to make any adjustments, if needed.
2. Verify with your Mortgage Professional if the GFE is factoring in your earnest money deposit.
3. Your Mortgage Professional should obtain an estimated HUD-1 Settlement Statement from the escrow company 2 days before closing to review it for any corrections or modifications.   
4. You may want to request seeing a copy of your estimated HUD-1 Settlement Statement prior to your signing appointment.   Currently this is not standard practice.   
5. Bring a copy of your Good Faith Estimate with you to your signing appointment.   The lender fees shown in Section 800 of the HUD should be close to those shown on your Good Faith Estimate.

What if there are errors?  Try not to panic. Depending on how much time there is prior to the scheduled funding, the lender may be able to redraft loan documents if needed.   80% of our loans our funded within our own credit line so unless it involves someone having to be re-approved for a higher loan amount, loan documents can be emailed fairly easily to the escrow company.   Often times, it could just be correcting a few documents and not the entire loan package.

The closing table can be an emotional time.   It's in your best interest to have as many of the details worked as far in advance as possible.   If you have questions or concerns, speak up.  This is not the time to be bashful.   This is your mortgage and one of the largest financial transactions you will make in your lifetime…be responsible and take action.

There has been a huge trend in closing companies to provide on-line updates of your transactions.  The title and escrow company that I prefer to use is a prime example and one of the local innovators of this service.   I receive weekly updated emailed to me showing the status of my transactions and I can log in to their site and view a dash board of my current closings.   It’s a great tool and service.   Many other title and escrow companies have copied their systems or something similar.   

As great as the updates are, they are worthless if you don’t have service to back it up!  I currently have a transaction with an escrow company (not my preferred) and at first I was pleased with the email updates I was receiving.    We are scheduled to close in early May and we delivered loan docs to escrow April 16 (just shy of over two weeks before closing).   My processor confirmed with the escrow officer that the loan docs were received.   

We have sent countless emails and phone calls the the closing team to see when the buyer is signing and to receive an estimated HUD-1 Settlement Statement.   No response from the escrow company…until I called the Realtor (who’s company has an interest in the escrow company).   Voila…presto Escrow Officer!  She’s now going to work on providing an estimated HUD-1 (after having the loan documents for 8 business days).

Sorry for the rant…my message to escrow companies (and to any company) who are implementing a lot of bells and whistles:  don’t bother unless you have the staff to back it up!  You’ve just thrown away all of the dollars invested into your software and system and blown it because your staff cannot return phone calls or emails. 

Bill Massey, my manager many moons ago when I worked at Safeco Title used to tell me to "under promise and over deliver".   This is a classic example of what happens when you do the opposite.    This also proves how service can suffer when business is controlled and not earned.   

I’m waiting to post this until after the transaction closes…