I just attended the strangest "settlement" of my real estate career for a listing of mine. Here are the details:
The lender insisted on their affiliated title company doing the closing in order for the buyer to get the best deal. He did choose it, so there was no RESPA violation, but it sounds like he was somewhat coerced in order to get a credit.
The buyer's agent wrote two title companies with a / in between in the contract. One was physically in our area, the other in a completely different state, very far away. My assumption was that the local company was an affiliate of the out of state one...I was wrong. Never assume!
In VA the buyer has the right to choose where we settle.
In the weeks preceding the closing there was mass confusion between these two companies as to who was doing what part of the transaction. Neither one actually knew what they were doing until it was finally concluded the local company was only preparing the deed for the seller, the out of state company did the rest.
- We were asked for payoff info from both companies. Had to ping pong back and forth as to who was doing what on that and every other detail.
- My seller was newly married, but owned the condo for years before she got married, husband was not on the title, deed or mortgage.
- We were told by the out of state company that the husband had to sign even though he did not own the house (Absolutely NOT the law here, and husband was out of town on business). Took multiple emails and phone calls by me to get that mess straightened out.
- Of course we did not settle on time even though there was a 45 day escrow.
- When we got to closing there was no one there to run the show. The processor for the local law firm did her best, but she was not a settlement agent. The lawyer did eventually show up, but he was not the settlement agent.
- The out of state title company sent a mobile notary who was only a notary. She was a nice lady, but not allowed to discuss any of the papers she had, not allowed to even touch the checks.
- They also sent a 1099 for the TAX PRORATION that the seller got back from the buyer for the amount she'd prepaid. That would not be income people. That goodness the lawyer on site told us to just pitch it. I would not have allowed her to sign it and the notary, well, she wasn't allowed to talk.
- They also brought a final water bill payoff sheet for everyone to sign, even though they were told weeks ago that it's a condo and there is no water bill.
- The seller brought money to the table, so her cashier's check, along with the buyer's down payment and the HUD-1, and the deed, were put in a UPS Envelope that the buyer's agent was to take to UPS that night.
- The attorney for the law firm did explain a few of the documents to the seller, but the buyer was kind of on his own except for his real estate agent.
My seller and I left feeling as though we'd conducted a settlement in the rabbit hole and we were Alice. I am not completely sure if we closed, as the UPS Envelope, our settelment agent, was not talking.
I won't say who the lender is, but they are national, online, and more known for their business software than banking.
I think it's fair to say that no credit that they gave the buyer was worth the mass confusion that was masquerading as a closing.
Please use local lenders! Please. Not everything can be done online. And settling with an out of state title company is just a recipe for disaster.
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