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Yes, After Disbursement a loan can unfund--Here's Why/How
Posted by ItsMe123 of ? on 5/13/05 12:01am Msg #37446
In regards to your situation, Never would it okay to do what they ask.

Unfortuantly unfunds, although rare, they do happen. Usually it would not be this late but it can and does happen this late. A lender can and does pull back wires from title all day long.

Sounds likely the new deed does not match the previous vesting. This happens because the borrower tells LO a name for the 1003, the loan docs get drawn with the name on the 1003 and noone notices that the new "proposed insured" ("proposed insured is the name on title taken from the 1003 or from the time title was ordered) on the prelim title report does not match the existing vesting as recorded in the county. Easy error with big consequences. I guess some may blame the LO or whomever else down the chain. It starts with the LO but seriuosly what borrower would be able to answer the LO correctly when she/he asks, "How exactly is your property currently vested at the county courthouse, uuummm, I need to know this to properly fill out your loan application". Could you answer that question if someone asked about your home? The LO then gathers the info to build a loan. The processor, if a LO uses one, submits the "gathering". The gathered file goes to underwriting and an underwriter may catch it ---they are trying to clear "conditions" quickly though so the loan is not lost by their company to another company that can clear quicker. A 24hr "turn time" or "clear" time is competitive in this business but some wholesalers look to boast a 3 hour "clear time"---the underwriter will look to "clear" the file, throw out "stips" (loan stipulations that must be satisfied to close) to the LO, the LO will answer the "stips". The underwriter will "sign off" on the last "stip" and BOOM---we got a loan. In this process they can miss it. Now we have a "clear to close" with improper vesting. Now the file is to a funder, they miss it as they are trying to get docs drawn, fund the paper, get the wire to title and make sure title knows the wire is there. Last but not least is escrow, they miss it as they are dealing with the HUD and the title docs (or junk docs as they are frequently called.). Did I mention it is the end of the month so all of these people are on "slam" mode. Slam them though. This is the number one reason for a quick slipped in Quit Claim at close to prevent a re-draw of loan docs. Many/Most wholesale lenders charge a 150.00 dollars for a re-draw. No excuses here--just the facts, been guilty of it myself.

They do have a considerable problem if the vesting is wrong and the secondary investor is refusing to buy/fund the paper back from/to the lender. I imagine this late it was probably caught by an investor/secondary market and they may be trying to satisfy this condition so the lender is able to sell the loan on to the secondary market. This is yet another funding in the process. Investors/secondary market and sometimes even farther out in the market (in the case of many "super brokers" who some mistakenly think are wholesalers, a loan may see 3 sales processes) invest in the paper and in turn hire "servicers" to "service the paper". The loan due to vesting issues may not be secured by the collateral. Quit claiming is most likely not an option now as it would be impossible this late to have the vesting changed and still reflect the dates they need.

It would be interesting to see how they did solve the problem but it is probably better to not go there.

Although one may be a "that's not my job notary", notaries are the last person in a long line of people who have looked and looked at how a loan is built/drawn soley to satisfy the secondary market and probably because they are trying to do the duties outlined above, they missed the issue. There is sometimes a prelim title in the doc package so an escrow officer/closing agent can be one more in the line of defense---sometimes this will go out in the title docs to the closer/signing agent. Usually at this point in the game escrow is going to miss it as they see everything in line because a "clear to close" has been issued. and they find themselves doing a HUD "on the fly" at the end on the month. If the prelim title report did go out with the title docs (junk docs) and the notary looked at the "junk docs" and noticed this on the prelim so someone could whip up a Quit Claim, they would be very appreciated.

That's why the notaries that sign down my paper are called "Money"
P.S. Ted---nothing out your way yet.

I might not be the best speller/typer but I know this business---LOL

Take Care
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Messages in this Thread
 Thoughts on this please - MI_Notary on 5/12/05 8:36pm
 Re: Thoughts on this please -  SamIam_CA on 5/12/05 8:44pm
 Re: Thoughts on this please - MI_Notary on 5/12/05 9:11pm
 Re: Thoughts on this please - Julie-mi on 5/12/05 8:47pm
 Re: Thoughts on this please - MI_Notary on 5/12/05 9:08pm
 Re: Thoughts on this please - Barry on 5/12/05 9:25pm
 Re: Thoughts on this please - Nancy in Florida on 5/12/05 11:01pm
 Re: Thoughts on this please - MI_Notary on 5/13/05 10:20am
 Yes, After Disbursement a loan can unfund--Here's Why/How - ItsMe123 on 5/13/05 12:01am
 It simply amazes me...... - Joan-OH on 5/13/05 7:27am
 Re: It simply amazes me...... - Nancy in Florida on 5/13/05 8:55am
 Re: Yes, After Disbursement a loan can unfund--Here's Why/How - MI_Notary on 5/13/05 10:37am
 Re: Thoughts on this please - Lee/AR on 5/12/05 11:55pm
 Re: Thoughts on this please - Kevin Ahern on 5/13/05 4:48am

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