THE "DRY" CLOSING...
Buyers and Sellers have agreed terms and conditions, the Buyers have done their inspections, all the repairs have been negotiated and agreed, the Sellers have done the repairs, the closing attorney has done the title work, insurance has been ordered, the appraisal has been received and came back OK, everything seems going perfect to close on time...
Enter, the lender's UNDERWRITER/AUDITOR/FINAL CHECK...
During the housing boom that ended a few years ago, underwriters were just an extra check, and they were not really very concerned about confirming every little detail on the loan application, the contract and the origin of the deposit money. Maybe that's one of the reasons why we are in this mess altogether!
This has changed! Today underwriters have (it seems) unlimited power to minutiously dissect every little detail of the transaction, look for inconsistencies and faults until they find some, and then demand proof or amendments as they see fit! I closed a transaction last month where the underwriters requested three different written confirmation letters from my client's employer before they approved the loan!
It is really no surprise then, that files are taking a lot longer to be processed, that many loans that seemed like a "slam dunk" to the loan officer are being denied, and that the list of requirements and stipulations to approve a loan has grown exponentially.
Many of these requirements (unfortunately) tend to appear in the last few days before the closing, when everyone involved thinks the transaction is going to close on time. Last minute underwriting stipilations send Buyers, Buyer's Agents, Mortgage Officers and Attorneys scrambling for cover in their effort to make the closing deadline. Sadly, the loan is often not approved on time for the loan package to arrive to the attorney, and/or for the money to be wired into the attorney's account on time for the closing.
If approval is granted, but the money does not arrive on time, the parties can still go through the closing (a "dry" closing means all the documents have been signed, but the financial part of the transaction has not been completed) and the transaction will have to be put "on hold" until the money arrives. This can be a problem for buyers who have the moving van arriving the day of the closing!
In this case it is best practice to let the attorneys hold all the documents, keys and garage door openers until the transaction is fully completed. Most dry closings are completed by the following business day - one of the reasons why we try to avoid scheduling our closings on Fridays...just in case.
Hire an experienced real estate professional: Call us on (843) 900 0155, let us help you with all of your Real Estate needs!!
Please contact us if you have any questions or comments.