Escrow: Do you really know what you are getting in to?

Filed under: Escrow — admin @ 6:43 pm

Mary Kladde

Are you thinking about doing business in an “Escrow/Dry” State or have you entered the lending arena in these states with little or no working knowledge of what “Escrow” State means?  Do you know which states are classified as “Escrow” States?  Do you understand the subtle differences in standard business practices within the individual states that are classified as Escrow States?    Do you really know what you are getting in to?

The fact of the matter is that 86% of states operate as “Wet/Closing” states?  This means that the loan will fund on the day of signing/closing in the case of a purchase or immediately after the 3 day right of rescission in the case of a refinance.    Escrow states, on the other hand, have varied disbursement dates depending on the performance of escrow to the lender’s satisfaction.  To put it more simply, the lender has the option to fund/disburse the loan once they are completely satisfied all conditions have been met to their expectation.

This control is definitely to the benefit to the lender in that they can make sure everything is perfect before funding the loan, but it can sometimes delay disbursement as much as 2 weeks.  If the escrow process is not managed efficiently and effectively, you could end up reviewing files two and three times with borrowers sometimes having to execute entirely new document packages due to delays or losing the loan altogether.  These delays or missteps lead to lost time, loans, and ultimately; MONEY.

Manage funding in Escrow States just like you would a “Closing/Wet” State you say?!  Do you really want to go there or are you already feeling the pain of having made this type of decision?

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