But more and more counties have electronic recording, so "disbursement" can happen the same day as funding. It still takes another day for funds to be transferred, though, so the impact is the same, but the wording is potentially inaccurate or misleading.
A little background... Apparently, this form is in response to a CA law that says that a borrower doesn't have to pay overlapping interest on two loans for more than one day. As coastal/CA stated, if the loan funds on a Friday, but the previous lender doesn't get the funds until Monday (due to overnight funds transfer procedures), the borrower would be paying for both loans over the weekend.
So apparently under CA law, a borrower could request that the loan fund on Monday instead of Friday to prevent that overlap. There are a couple of problems with this, though. As was stated elsewhere, the disbursement date has usually (but not always) previously been determined and appropriate interest costs included in the CD. Ideally, this should be discussed with the BOs in advance where it could become an issue, but that seems to be rare (or it goes over peoples heads and they forget). Another possibility is that EOs don't want to deal with it or don't get it themselves.
Also, the way the form is written by many lenders (probably by attorneys who thought they were so clever...), it may not reflect actual circumstances. I guess it depends on how you define "disbursement". We're in a Catch 22 with this form, as many lenders require that a box be checked, but may not fill in the blanks and don't provide any direction or explanation for it. Hate that!
There are a small handful of lenders whose lawyers have figured out a better way of addressing this law without putting an undue burden on the borrower. I love it when there's a stated disbursement date and we can just go by that, or better yet, a disclosure statement about this issue that doesn't ask the borrower to check a box! (I've found that very few LOs have a clue about this document, either. Worse, they don't want to look ignorant, so they guess...) One or two lenders have a box checked in advance. Love those!
Just for the record, there may be a very few situations where it could be to a borrower's advantage to go ahead and pay the overlapping interest on both loans. One would be if there's a rate lock that's expiring. Another would be if they're paying off an FHA loan, and waiting until the following week would put them into the next month. That could be VERY costly, as FHA loans don't allow prorating interest. They always require a full month's interest be paid, which is why so many of those happen at EOM. Much better to pay a few days extra interest than a whole extra month's payment!
I do wonder sometimes, though, if it makes any difference if a BO checks the wrong box...
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