topic Re: A Warning for My Fellow Closers! in Mortgage Loans

A Warning for My Fellow Closers!

Alberio — Fri, 09 May 2014 18:31:52 GMT

Hi all -

In great news, I got my Clear to Close today. Hooray! We close next Friday (the 16th).

As part of this discussion, my LO tells me not to spend any money, not even out of my bank account (i.e. not even when its money I have in hand) and certainly not to open new credit, make large purchases etc. All this I suspected, but what I was shocked about was how LONG he wants me to hold off.

He says I need to stay still and not move a muscle financially for up to TWO WEEKS AFTER closing. He says that's because they may immediately sell my mortgage to another lender (he specifically gave Chase as an example) and that lender may do a soft pull before taking it. If they aren't happy with what they see, I go back to underwriting!

As an aside, what happens if they were unhappy with what they saw? I have keys to the home by then, do I have to give it back? WTH??

Anyway, primarily I wanted to share this as a warning. There have been questions lately about whether you are free to start using credit and opening credit and spending money once you have the clear to close, but I am hearing that at least for some people, it goes well beyond closing even. Ugh. I need a lawnmower!!!

Re: A Warning for My Fellow Closers!

TimeToRecover — Fri, 09 May 2014 18:53:20 GMT

This is the first I have heard of this.

CONGRATS on your closing and well maybe it won't rain and the yard won't grow much the first 2 weeks.

Re: A Warning for My Fellow Closers!

patrick00032001 — Fri, 09 May 2014 19:03:01 GMT

Most mortgage brokers or mortgage companies sell off mortgage paper, much like a car dealership sells its retail contracts to banks and credit unions once the deal is finalized, it sounds to me like your loan officer or broker doesnt want to be stuck with your mortgage on his portfolio, so hes having you be cautous instead. Banks and credit unions sell mortgages on quality terms, if for some reason a mortgage company or bank can get the quality thats to Chase's specs, he might have to hold it on his books!

Re: A Warning for My Fellow Closers!

CelesteR — Fri, 09 May 2014 19:37:30 GMT

Ours was sold before we even closed! At closing i signed papers that it was sold and first payment would be to Wells Fargo. I don't think once the loan is closed and funded they can deny it.

Re: A Warning for My Fellow Closers!

StartingOver10 — Fri, 09 May 2014 20:09:32 GMT

@CelesteR wrote:
Ours was sold before we even closed! At closing i signed papers that it was sold and first payment would be to Wells Fargo. I don't think once the loan is closed and funded they can deny it.

Exactly. Once it is closed and funded the house is yours.

Selling the loan is the lenders perogative but you certainly can go about your normal business after you close.

Yes, the new lender will run your credit before purchasing the loan.

Most of the time the sale is pretty much as CclesteR said...effective right at the closing table. And Wells seems to buy them a lot from my experience.

Re: A Warning for My Fellow Closers!

patrick00032001 — Fri, 09 May 2014 20:42:54 GMT

But I do agree with the last 2 posts on here, once your closed, its a done deal. My credit union converted my mortgage from a construction fixed rate to a conventional after completion, and kept it on their books, as the rate I got, 3.875% for 30 years, was less than what Fannie Mae was buying mortgages for! My credit union would have had to pay them to buy my mortgage because rates had increased since I had closed on my construction loan. The point I was making earlier about your loan officer was, just like when I contract a deal here in my F&I office at the dealership, if the lender who agreed to buy the contract from me for some reason refused to, income didnt verify, or other conditions werent met, ect..., legally by law, the customer can make me enforce the terms with my dealership, since the contract was written up by me the dealer, and them, the buyer. Same with mortgages, if something changes, that affects the quality of the mortgage, Fannie, Freddie, or any other buyer can, and will refuse the loan, and if its already closed, the orginator, meaning the people who generated the loan, will have to keep it on their books, until they can find someone else to buy it on the set terms.

Re: A Warning for My Fellow Closers!

Alberio — Fri, 09 May 2014 20:46:36 GMT

Thanks everyone. So what I am hearing is, my LO is just trying to put the fear of God in me about having to go back to underwriting etc. so that I won't do anything that may jeopardize his ability to sell my loan? In short, this is all about the loan originator getting what they want and not about protecting me? That's a dickish move in my book.

Are loans generally funded immediately, or does it take a little time after the close?

Re: A Warning for My Fellow Closers!

patrick00032001 — Fri, 09 May 2014 20:57:03 GMT

Since I did a construction loan, the lender, handled the disbursements, which are called draws, since most lenders only disperse funds during different phases of the building process, which normally requires an appraiser to come out and verify the work has been completed to spec, and then the lender, will disperse the funds. In a typical situation where your buying a pre existing home, the title company where you close normally wires the money from the lender to the title company, and from there, the title company handles where the funds go, realty company, if one was involved, the sellers, ect....

Re: A Warning for My Fellow Closers!

StartingOver10 — Fri, 09 May 2014 21:21:56 GMT

^^^The above is true for table funding states, which most of the US funds at the table.

However, there are several states, mainly in the western US that are "dry funding" type states or escrow states.

They have a delay of any where from one to three days after you sign the paperwork before they fund. Those states are: http://www.bankerbroker.com/resources/questions-answers/dryfundingstatevswetfundingstate

Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington (state, not DC)

Re: A Warning for My Fellow Closers!

patrick00032001 — Fri, 09 May 2014 21:28:52 GMT

Indiana here!

Re: A Warning for My Fellow Closers!

CelesteR — Fri, 09 May 2014 21:46:40 GMT

@StartingOver10 wrote:
^^^The above is true for table funding states, which most of the US funds at the table.

However, there are several states, mainly in the western US that are "dry funding" type states or escrow states.
They have a delay of any where from one to three days after you sign the paperwork before they fund. Those states are: http://www.bankerbroker.com/resources/questions-answers/dryfundingstatevswetfundingstate

Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington (state, not DC)

What they said ^. I'm in Texas. I actually closed at 4pm on the 30th but the seller was out of town and didn't sign theirs till the next day. Even though I was finished I didn't get the keys till the seller signed their part and about an hour later I got the call that we were closed and funded and I was able to go pick up my keys.

Re: A Warning for My Fellow Closers!

CreditHealthy — Fri, 09 May 2014 22:38:53 GMT

Thanks for sharing!

Re: A Warning for My Fellow Closers!

jcrsmom — Sat, 10 May 2014 01:03:45 GMT

That's crazy especially since you will have bills to pay!