Posted by Kenneth Henrich on 3/23/07 6:54pm
Msg #181644

Question about prepaid interest collected at funding

I am having a hard time understanding this document. This is in a Countrywide package. If I am reading this correct, the borrowers either initial and do not sign, if they are not requesting a Monday close.
If they are requesting a Monday close, they would sign and not initial, and there would an additional per diem interest charge.
Why would they wait a few extra days to close, AND pay an additional interest charge, when they could close at the end of the reccission period and not pay extra?
Thanks,
Ken.

Reply by Gary_CA on 3/23/07 8:00pm
Msg #181648

It goes like this...

At least in CA... your mileage may vary...

TC can't release funds until the deed records. They can't record the deed until they have funds. Around here most counties records once a day, in the morning. They used to do a special recording if you needed it in the afternoon, but that was too much like actually serving the public so they quit. They could just record once in the afternoon, but that would be logical and you might confuse them with the private sector. They're government, they do it their way, in the morning.

So... for all practical purposes you have to fund the day before you close.

Your borrower is going to pay interest on the new loan as soon as it funds and also on the old loan till it's paid off after recording.

He always gets screwed for one day's interest.

If it funds on Friday and records on Monday it's three days.

If it funds on Friday and Monday is a holiday and records on Tuesday... that's another day.

You have to disclose this and give him the option to say "don't fund on Friday" that's what the silly form is for.

BUT... there's all sorts of moving parts... rate locks expiring and people going on vacation and God only knows... so I figure any day the bank is ready to fund is a good day, and telling them they can't on a particular day is asking for trouble... it's better to gamble 3 days interest than to gamble on blowing up the loan.

I tell the borrowers just that and I've never had one say "no, don't fund on Friday".

FWIW

Reply by TitleGalCA on 3/23/07 8:12pm
Msg #181650

Re: It goes like this...

***They used to do a special recording if you needed it in the afternoon, but that was too much like actually serving the public so they quit.***

ROTF at your explanation of the county recorder...they have all kinds of reason/excuses why there's no special recordings anymore but there's no substance to them. I think specials simply interferred with the supervisors coffee break.