Thursday, June 26, 2014
The Closing Process
- We receive your title request.
- We order the title exam. *
- We order the Municipal Lien Certificate. *
- We order the Plot Plan (Survey), if required. *
- We send a letter to the borrower, which introduces the firm and requests certain information in order to expedite obtaining payoffs and insurance binders.
- We order Payoff Statement(s).
- We schedule the closing upon notification that the loan is “cleared to close.”
- We disburse all monies upon funding.
* Please be mindful that whether the loan closes or not, the service providers must be paid
The Law Office of Marc E. Canner services all of Massachusetts and has title examiners in all of the main Registry of Deeds. We can accommodate just about any special circumstance, be it same day or next day closings, traveling to close at a borrower’s residence or clearing up complex title matters.
1. Title Issues
The most common title issue is an undischarged mortgage. It is not unusual for a title exam to reveal either undischarged prior-owner or current-owner mortgages, or both. In almost all cases, the mortgage has been paid off, but the bank has either not issued a discharge or the requesting attorney has not recorded it. These discharges can normally be obtained easily. On occasion, however, where a bank has merged or dissolved, it can be very difficult. In such cases, the only recourse is to contact the F.D.I.C.
Another common title issue is a missing assignment. This occurs where one mortgage holder in the chain of title sells the instruments to another lender, but does not record the requisite paperwork with the appropriate registry of deeds (or land court). This creates the situation where the current holder of the mortgage is not the holder of record. Like undischarged mortgages, missing assignments can normally be obtained easily.
Once we encounter a title issue: we will notify the loan originator. We will make every effort to contact the prior attorney upon discovery of a title issue. If that attorney is non-responsive, we will contact the borrower. If the borrower cannot provide sufficient documentation to clear up the title issue, we will either hold back funds at the closing and have the borrower sign an indemnification letter, or charge the borrower to clear up the title.
Most payoff statements are easily obtained; however, some Banks take up to seven (7) business days to generate a payoff statement. These instances usually involve a loan that features a prepayment penalty. As such, it is incumbent upon the loan originator to find out (at application) whether the borrower’s current loan has a prepayment penalty.
3. Subordination Agreements
In some instances, a borrower may have an existing equity line/loan or second mortgage, which they do not wish to pay-off or close out. If this occurs, the borrower will need to get the secondary-lien holder to agree to subordinate their interest and lien to the soon-to-be new first-lien holder (a subordination agreement.) Getting a Bank to issue a subordination agreement is not difficult, getting a Bank to issue it timely can sometimes be impossible. Our experience shows that the borrower is usually best at obtaining such agreements. Owing to the difficulty in obtaining these agreements, it is essential that the loan originator determine at the outset whether the borrower has such needs. We will not close a loan without the proper subordination agreement in-office.
4. Accuracy and Follow-Up
By far the greatest obstacle to providing your customers with the type of professional services that tends to generate repeat business and referrals is inaccuracies in the title requests and other correspondences. It is important that title requests are legible and accurate.If changes are made during loan processing, it is equally imperative to inform us of these changes.
In accordance with the reality of expiring “Rate Locks,” we have the ability to close your loans on very short notice (indeed, we have closed loans on the same day we received the title requests – difficult, but possible.) Not surprising however, we prefer more notification so that we may provide your borrowers with the unhurried and professional closing services that they deserve. The main problem with short notice is that our title examiners may not have completed their title search by the time the loan is cleared and needs to close. In many cases, the title examiner does not even start the exam until called by our office; normally this call occurs once we are informed the loan is cleared to close. Giving the borrower one week to arrange a closing date is ideal. This solves the problem of the upset borrower who cannot close on such short notice, and it allows us to make sure that the title exam is completed. It even provides us with some time to clear up certain title defects.
Our office understands the benefit of advertising to your borrowers the flexibility of your closing attorney. In such a competitive marketplace, a flexible closing attorney may generate more business, which is good for everybody. As such, and under normal circumstances, we travel to meet the unique concerns of yours borrowers. In fact, we pride ourselves on our flexibility and ability to accommodate. Sometimes, however, travel is neither reasonable nor possible. Traveling two and a half hours to conduct a forty-five minute closing ultimately hurts your other borrowers, as there will be less coverage in the office for their closings. In addition to such concerns, we also cannot make corrections to the loan documents outside of the office. In the past, we have had to travel to a borrower’s house multiple times because of certain inaccuracies in the loan documents. As such, we request that you do not represent to your borrowers that we will travel to their homes or workplaces unless there is a compelling need (i.e. illness or handicap.)
Most importantly, we are here to make the closing process run as smoothly and as professionally as possible for both you and your borrowers. Call us at any time. Thank you in advance for your business.