Delays in closings will happen! A broker in my office came to me yesterday with some questions about a seller’s recourse if the loan doesn’t fund at closing.
Colorado is a “table closing” state, and our contract expressly states that the buyer must attend the closing with all moneys and documents. This means that if a closing is at 4 p.m. on a Wednesday, as this broker’s closing was, the buyer and the buyer’s lender must perform under the terms of the contract at 4 p.m.
This lender had a lackadaisical attitude, ignored the new HERA/HOEPA regulations and essentially didn’t do his job. He was told on August 23rd that there was a slight change in the final figures, but he failed to disclose the change to the buyer.
Under the new regulations, any change upward to the buyer’s APR (over 1/8%) must be disclosed in writing to that buyer and the closing can’t happen until 3 days after the disclosure is made.
The loan broker did not disclose the resulting change in APR to the buyer until yesterday, the day of the closing. Actually, it was the second date for the closing, since this lender also didn’t order the appraisal on time (another story.)
Real Estate Buyers – Caution!
You are at risk to lose your earnest money in Colorado if you aren’t prepared to close at the date and time the closing is scheduled in the contract. In this case, the earnest money was $8,000. You lender and your real estate broker must be watching out for you and advising you. How could you possibly keep up with the changes in our industry? It’s obvious that many lenders and real estate brokers aren’t even keeping up. If the real estate broker in this instance had been on top of her game, she would have hounded the loan broker to get his disclosures out.
Her managing broker is helping her out, and using this as a “teaching moment” by paying the sellers’ damages. This equates to their loan per diem until the closing and various other pro-rations and charges. He’s a good broker and stepped up to the plate immediately because he understood that we must not stand in the way of a buyer and seller finalizing the transaction, or risk our clients’ earnest money. I’m sure he’ll also go after that lender for leaving him hanging in the wind like that.
This added level of complexity makes it more essential than ever that you hire a professional and seasoned real estate broker and that you listen when they tell you what to look for in your lender.
Don’t leave your earnest money to chance.