Saturday, November 24, 2007

query: what happens to a mortgage after it closes

That's a really good query. Thanks. Good post-closing functions are key to running an efficient title agency and loan servicing operation. Let's take a look at post-closing from the perspective of both the title agent and the mortgage lender.

Let's start at the point where the "closer" takes the documents back to their office following closing. The "closer" will perform a final review to make sure they haven't missed any signatures or conditions. The "closer" makes notes for post-closing clarifying any issues that may have arisen at the closing table. [For instance, let's say the sellers paid a water bill which was listed as owing on the HUD. The note would direct post-closing to verify that payment so they can void the check to the water company and refund the money to the seller.] The "closer" turns the entire file over to post-closing.

Post-closing once again audits the entire document package trying to find any errors. They check notary seals, dates, addresses and names; they also check money. Post-closing is the final balancing point to be certain that proper amounts were received from the mortgage lender and the buyer. The checks are verified against the final signed HUD-1 to be certain no changes made were missed.

Once satisfied that the transaction has been properly closed, the original Deed (conveyance) and Mortgage/Deed of Trust are sent for final bringdown and recording at the courthouse. Certified copies of these documents will be combined with the other original documents and organized in whatever format the lender has requested. Each lender has its own set of instructions for final delivery of documents. Post-closing must be very detail oriented and able to read and follow intricate instructions.

Mortgage loan payoffs and payments from the HUD-1, anything that has not already been disbursed, will be processed by post-closing along with any related letters such as tax collector notifications and mortgage satisfaction requests.

Short form loan policies are created for delivery with the loan package. The file information is logged for the title underwriter.

While all of this is taking place, the post-closer is making copies all the documents for record retention.

At this stage, the loan package, the recording package and all other payments and notfications are sent out via courier or US mail. The file then awaits the return of recorded documents and upon receipt, the final delivery of the original mortgage goes to the lender and the owner policy is issued to the buyer along with their original deed. Copies of both title policies along with a check for the insurance premium are mailed to the title underwriter.

Finally, the entire file is scanned for storage and the paper contents are shredded.

That's the perspective of the title agent, now let's look at the mortgage lender.

The document delivery receipt area of a mortgage lender will usually be in the secondary marketing center. At this location the file will be audited for adherence to the closing instructions. The original note will be routed to custodial care and placement in a pool destined for sale in the secondary mortgage market.

A copy of the note and the remainder of the document package will move through the various lender procedures with applicable data on taxes and insurance and the repayment program being entered into the servicing computer. The file will be scanned and the original documents will be placed in storage. Quality control will pull certain percentages - at least 10% - of the transactions for yet another review.

You should expect to wait at least 30 days before your file is completely accessible by your mortgage servicer's customer service center. In the interim, your title agent or mortgage origination center will be your contacts for issues that need immediate attention.


D said...

Thanks for the step by step details, I've sold hundreds of homes personally and didn't know about some of those steps.

Diane Cipa, The Closing Specialists® said...

You're welcome, D. ;)