Here are a few things that often delay escrows unnecessarily. We warn buyers about all of these issues repeatedly, but the problems resurface time and again anyway. Hence, we like to share this info with agents as well, so they can coach buyers too and help avoid delays.
Evidence of Insurance: Lenders must have proof of hazard insurance before they can draw loan documents. Unfortunately, many buyers think they can wait until the last minute to provide insurance info.
But, once lenders get the info, they have to get the insurance provider to give “formal proof” and providers are often less than responsive.
Buyers need to remember too that they can always change providers after close of escrow, so choosing an insurance provider is not as serious as many think.
Unsourced Cash to Close: Buyers often patch together different sources for the cash required to close, and that is of course understandable.
What creates problems for lenders, however, is the use of cash from accounts that have not yet been disclosed to the lender.
When this happens, lenders need to get at least two months of bank statements from those accounts, and they also need to go through those statements to ensure there are no unexplained deposits or other issues.
This entire process can create major delays.
Below is the #1 item from the “Actions to Avoid” list on our website. This relates to unsourced funds, and we like to remind “donors” (relatives gifting money) to always deposit their funds directly to escrow as opposed to the recipient’s bank account.
DO NOT have relatives deposit “gift funds” into your account. It is best to have them deposited directly to escrow instead. If they are deposited into your bank account, we will need a copy of your donor’s bank statements in order to “paper-trail” the transaction.
Last Minute Seller Credits: Agents and buyers alike need to know that last minute seller credits will always delay closings b/c they require lenders to go back to underwriting and/or to re-run “DU” or “AUS” (the automated underwriters).
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646