Posted by Elizabeth Soliday on 9/15/06 10:58pm
Msg #146458

OT Question about my own loan docs...

Give your opinion/advice if you don't mind.

Ok, I am a little irritated with the docs I signed for my house tonight. The seller was supposed to pay $5000 in closing costs and only ended up paying about $2500 which did not include my appraisal fee, (credit report, prepaid interest and insurance). As far as I have been educated, these all are a part of my closing costs.

Also, my real estate agent said that we would not get the keys until next Wed. or Thurs. after the loan has been recorded and I see on the paperwork that I am paying interest from today 9/15-10/1, $100+ before I even get the keys!

Is this normal? I have always got the keys at signing in the past. (never had seller pay closing before)

Reply by Jersey_Boy on 9/15/06 11:05pm
Msg #146459

In my opinion, if you signed the papers, then you own the home.
Keys should be in your hands.

just my opinion.... and good luck with the new home by the way.

Reply by PAW on 9/16/06 8:19am
Msg #146508

Depends. Is OR an escrow state? In that case, the loan may not be considered final until escrow is cleared and the loan is truly closed. FL, on the other hand, is a table funding state in that the transaction is closed, money and keys disbursed, at the table, unless prior arrangements for a 'dry' closing are made.

Reply by Ndwa on 9/15/06 11:43pm
Msg #146464

Speaking from my RE experience, there is a different in negotiating with the seller paying up to $5K in closing cost (which normally does not include the cost associated with your loan) and the seller to credit buyer $5K at closing (which you can apply toward all your closing costs).

If the loan already funded & seller has been paid, you're entitled to the key.

Reply by Bob_Chicago on 9/16/06 12:00am
Msg #146467

Do not want to make you feel worse than you do now, but....

this shows the importance of having an experienced
real estate attorney on your side, especially when purchasing a house..
The RE broker's interest pretty much starts and stops with
earning a commisssion.
Do not know what state you are in (other than angry) but in
most jurisdictions, keys and money pass at the closing table.
Does your lender have some wierd reqmnts? No idea what mortgage
recording has to do with the issue.
Andy's analysis sounds reasonable as to the closing cost credit.
This goes back to my first point.

Reply by BP/WV on 9/16/06 7:38am
Msg #146496

Re: Do not want to make you feel worse than you do now, but....

Yes Bob... I could not agree more.

I have assisted attorneys on numerous purchase closings. The keys are always surrenedered to the purchasers during that time as is monies due to sellers.

Now, had I been in your shoes and was told that I could not get the keys until the mortgage recorded, my husband would have had to drag me out like a two year old in toys r us.

Reply by John_NorCal on 9/16/06 12:26am
Msg #146472

As Andy pointed out, it's all in the wording as to what and how much closing costs are paid. As for the keys, unless Oregon is different than California, the house belongs to the seller until the deed is recorded at which time they get their funds. The lender charging you interest when they fund the loan is again normal, funding the loan isn't necessarily the date the day the deed records. Sorry if I'm bursting your bubble. Instead of high tailing it to a lawyer, talk to your Realtor, and to his broker if necessary, to get a better explanation of what is going on.

Reply by Linda_H/FL on 9/16/06 12:27am
Msg #146473

Some lenders cap the closing cost contribution from the Seller to Buyer regardless of contract provisions...a percentage of the loan amount..

As to keys - never heard that keys are not turned over to purchaser at table - but I'm used to table-funded states and not escrow states..

Reply by Kate/CA on 9/16/06 1:57am
Msg #146480

Tell your realtor you want rent for these days you do not have access to the house. I moved in the day my loan closed. Did the same in OR. Normally you pay your cost at closing and they pay their cost, unless it is in writing that they pay more. I have paid all the fees to sell a house, mine and the borrowers on one house I had. Check your agreement. Why do they care when it is recorded. It could take a couple of weeks before someone does that, sounds like a stall tatic.

Reply by sue_pa on 9/16/06 2:25am
Msg #146483

why didn't you demand these answers about the costs while you were there? As the others have stated, it's the interpretation of the initial contract.

As for the keys, in my state we pass them at the table - sounds like you are in an escrow state - whoever represents you should have gone over that with you prior to closing.

Reply by Life Saving Services - Doug on 9/16/06 2:51am
Msg #146484

In your offer and any counter offers that the seller accepted. You agreed to a closing date and time. Usually the day at 5PM ( or what ever time ) that the home recorded. But some times the seller ( or your agent ) will leave in a default of close plus three days.

Everything is negotiable. All penalties for the seller not moving also need to be agreed to in writing in advance. Also your agents job was to make sure moneys where held in reserve to pay any penalties until both buyer and seller signed off that the sellers had moved out.

Yes as previously mentioned you do not necesarily need an attorney but an experienced attorney ( for those states that use them ) or an experience Realtor in other states that looks after the interests of who he or she represents.

I am a Realtor in Norco Calif and I am always countering to correct the missing items in offers that are in my clients best interest.

Reply by Lee/AR on 9/16/06 5:21am
Msg #146490

What you need to do before you do anything else suggested

1. Read your Offer to Purchase contract very thoroughly. There may be an 'occupancy at a later date' statement. If so, you should be entitled to rent, but what does the contract actually say? What should happen depends upon what the contract actually says.
2. Read the Closing Statement and/or HUD...said rent may have been handled there.
3. Yes, Elizabeth, you will begin paying interest from the day the loan/mortgage starts.
4. Ask your Broker for a thorough explanation...and keep asking until you are satisfied that you understand, keeping in mind exactly what was (& wasn't) on your Contract.
5. Keep in mind that lawsuits cost money, but Brokers don't like getting involved in them.

Reply by BetsyMI on 9/16/06 7:40am
Msg #146497

Re: What you need to do before you do anything else suggested

Hope you still had somewhere to live right after closing....and I hope you didn't have a moving van all set up for today!

I have no advice, just want you to know I feel for you. With my last home purchase, my closing was on a Friday at 4pm. We finished well after 5pm and I drove to my new home, keys in hand, only to find that not one of the keys worked in any of the locks, and of course I couldn't reach anyone by then to get it straightened out since it was after 6pm! You can imagine my disappointment.....but I was not to be turned away...I became very resourceful and broke into the garage! Yep I moved in the next day, but they sure heard about it from me on Monday when I got the correct keys!

Reply by Gary_CA on 9/16/06 2:31pm
Msg #146536

What you need to do before all that...

Call YOUR agent and rattle his cage.

1. What in the hell happened to the credit?

2. Is there an addendum for them to occupy after closing? By the way, if there is, they are your tenants those days... you need a couple things straight...a) you need it insured the moment it closes. b)you need a clause in there that makes it more expensive than the Biltmore if they stay extra days beyond what's agreed to already.

3. Why did the loan fund 15 days early? What the hell's up with that. Here in CA we are an escrow state... it is common to pay interest from the day the loan funds even though you don't get possession or own the house till it records. Sometimes a loan will fund on a Friday for a closing on Monday, and you'll owe 3 days interest... we try to avoid that when possible... but we don't get the loans funded that early, that's ridiculous.

4. While talking to your agent, be very nice, but sprinkle in some of these words: error, due diligence, mis representation, ommission, broker, fiduciary responsibility, attorney (as is "Gee I'd hate to muck up the deal and spend extra money, but this has to be done right." I'm guessing he just blew it on the credit, if it can't be worked out he should AT LEAST give you half of the missing $2500 from his commission.

5. You've still got time and if you have in writing that you're getting a $5,000 credit that's an escrow instruction... the escrow officer can't just change that unilaterally.

After you have you chat with the agent, be careful not to step in the puddle on the floor... then give him a day, he'll fix it.

Reply by Lisa Prestegard on 9/16/06 8:01am
Msg #146501

When negotiating closing costs, most real estate contracts will state "Seller contribution up to $XXXX toward Buyer closing costs". Your lender must usually approve which closing costs you, the Buyer, should pay without Seller assistance. As a Licensed Real Estate Broker in Florida (and formerly in Missouri), I've seen this sort of confusion dozens of times. Most often, the items you've mentioned such as credit report, appraisal and prepaid interest are Buyer-associated costs that lenders will not agree to let the Seller pay.
Shame on your R.E. agent for not covering you further in the initial contract with wording that would credit you the full $5K, such as offering a carpet, landscape or appliance credit for that amount instead of 'closing costs'. (What you do with that "credit" is your business after the sale) As to posession, neither FL or MO were escrow states, so I cannot comment on your situation except to say that in my experience, keys are transferred at Closing and any hold-over by the Seller should be prorated in terms of rents.
As an aside, not all R.E. agents and Brokers care only about their commission as Bob/Chicago stated in his reply. There are actually Realtors who take the Code of Ethics seriously
IMHO, the best defense is a good offense... next time, hire a Realtor with the GRI designation. It'll pay off in spades

Reply by PL on 9/16/06 9:01am
Msg #146513

My experience in Oregon (Ory-gun)

Was the agent held on to the keys until everything passed through the county. Also why don't you look at your Hud and your sales contract and see if on your Hud there aren't some sort of credits totalling $5000? I'd also call my agent this morning and have him/her explain what happened. Good luck

Reply by Elizabeth Soliday on 9/16/06 9:24pm
Msg #146566

Thanks for all the input

The loan docs were confusing, I had expenses in my column (to be paid out of borrowers funds) on the settlement statement that were actually paid by my closing credit from the seller. So I was wrong - I WAS credited the money for my closing costs.

Also, the real estate agent explained that in Oregon, the documents are sent back to the mortgage company and the underwriter is allowed two days of review before being sent to be recorded. My documents were "estimated" and to be updated at time of recording. (dates?)

All of this is strange to me, but there's nothing I can do about their processes so I may as well be patient.

Reply by Gary_CA on 9/17/06 8:40am
Msg #146589

Congrats... I'm left with just one question...

Man it's hard to diagnose all of this by internet (but we all have our opinions anyway)... sounds a lot like CA's process. We sign off a couple days before funding, and sometimes the underwriter comes back with a pre-funding condition or two.

Okay, so you got your credits... and the statment is estimated, now they're going to review, then fund, then close then keys... so far so good.

But I thought you thought they were funding 15 days prior to close????? That would cost you a lot of interest. Most counties around here only record early in the morning, so it's very common to fund the day before recording and pay one day's interest. Sometimes you have to fund on Friday to record on Monday and pay 3 days interest (bummer, don't do that)... but NEVER 15 days...

That's the only question left in my mind.

Congrats on your new house.

Reply by Teresa/FL on 9/17/06 12:16pm
Msg #146599

Re: Congrats... I'm left with just one question...

When you close a mortgage, whether it's a purchase or a refi, the lender charges interest from the day of funding to the first of the following month. This is your prepaid interest, one of the fees used to calculate the APR on the loan. Then the first payment on the loan is due the first of the next month. Each mortgage payment made includes interest for the previous month, this is called paying interest in "arrears".

Some equity loans do not calculate prepaid interest and have the payment due date equal the funding date, so the payment is due each month on that date instead of the first of each month.

Reply by Gary_CA on 9/17/06 1:02pm
Msg #146607

D'oh... she's right (so am I)

I hadn't thought about the interest from funding to first of next month... that's a no brainer and Teresa is absolutely right.

Of course you still don't want to fund any earlier than necessary, but her explanation makes much more sense.

Reply by LCS_CA on 9/17/06 12:56pm
Msg #146606

In California, when the escrow prepares the estimate, they may *estimate* interest from the date they prepare the statement which may be several days prior to funding. When the loan is actually funded, the interest will be adjusted to the date of funding which is generally one day prior to close of escrow (close of escrow in California is defined as the date the grant deed which transfer title into your name is recorded) unless your loan funded on Friday, then you might pay interest over the weekend (3 days: Fri., Sat., Sun.), and the closing occurred on Monday. Your final settlement statement, issued at the close of escrow, will indicate the actual date the interest accrued from.

Again, in California, your purchase contract will state when you are to receive occupancy - this was all negotiated with the seller when you made the offer - and can be any date agreed upon (date of closing, two days after closing, whatever), and that is the date you receive the keys. Usually, if the occupancy date is several days before or after the close of escrow date, some rental agreement is negotiated between the buyer and seller. As a seller, most folks will not release keys or give up possession of the property prior to close of escrow.

If the seller agreed to pay your closing costs - again, you would need to look at the purchase contract. If it was *non-recurring* costs, you would not receive credit for prepaid interest, insurance or impounds. If it was for *recurring* (loan origination, discount, credit, appraisal, processing, escrow and title fees, recording fees, etc.) AND *non-recurring* closing costs, then it would cover everything. Sometimes the lender will not allow credits for recurring closing costs, but again, in California, if that were the case, and the lender did not allow a certain credit, the escrow will generally prepare an amendment to the escrow.

The escrow officer should be able to answer your questions about the prepaid interest and the closing cost credit. The real estate agent can explain the occupancy issue and show you where in the contract that provision is set out. Make sure you get answers to your questions before depositing your funds to close the escrow... Good luck!

Reply by LCS_CA on 9/17/06 1:14pm
Msg #146608

California closing... one more point

In California the closing process is:

Buyer signs documents
Seller signs deed (usually earlier on in the transaction - depending on if you are in Southern or Northern California)
Documents returned to lender for funding
Buyer deposits funds in escrow
Lender deposits funds in escrow
Escrow closes - this is the day the deed and deed of trust (and any other required documents) are recorded
California law requires all funds must be deposited (and the requirement for cashiers checks or wired funds, etc.) prior to recordation
Depending upon the County Recorder requirements, in some areas, recordings (by title companies) only occur at 8:00 a.m. and in this case all funds must be deposited the day before recording - in other counties, buyers and lenders can wire funds to title in the morning, and when the funds are received, the documents are recorded in the late morning or afternoon (in this case date of funding and recording or closing date are the same)
Escrow disburses funds (payoffs, seller proceeds, other payments to be made through escrow)
Real estate agent gives keys to buyer - keys are not generally given to the buyer by escrow or at document signing. So if the transaction records at 8 a.m., that's when the buyer is entitled to receive keys (unless of course other arrangements have been negotiated)

The settlement statement you sign with loan documents is an estimated statement. It is not uncommon for the lender to adjust the amount of impounds or aggregate adjustment at the time of funding. Often the estimated statement is prepared before final bills for insurance premiums and other items have been deposited in the escrow. The escrow officer can tell you exactly which figures are estimated. The final settlement statement is prepared on the date the escrow is closed.

Hope this helps, of course it only will if you are in California! Closing practice varies widely from state to state, and even in California, there are major differences between the way escrows are processed in Southern and Northern parts of the state.