Monday, March 11, 2013

underwriting alert that deserves repeating

If you are asked to close a deal with any Lender where good funds, incoming money from the lender have not been received,  please contact the Underwriter prior to closing the transaction. 

In Underwriting Directive Numbers 30, 35 and 47 we drew your attention to the Mortgage Broker’s Act which requires a mortgage broker to disburse the proceeds of a mortgage loan as cash, wire transfer, certified check, or cashier’s check. At the end of 1998, Senate Bill No. 94 was signed into law by Governor Ridge which amended the Mortgage Broker’s Act. The Amendment, however, was a minor change and did not in any way change the requirement that a title agent receive good funds from any licensee under the Mortgage Broker’s Act. In fact, the amended section now reads "(a) prohibitions - a licensee shall not: (3) disburse the proceeds of a loan mortgage in any form other than cash, electronic fund transfer, certified check, or cashier’s check where such proceeds are disbursed by the licensee to a closing agent." Should you need a copy of the pertinent section of the Senate Bill, please do not hesitate to contact our office.

We would also like to remind you that these protections, which are for your benefit, do absolutely no good if you do not have the funds in your account prior to disbursing a loan. We have received more reports of delays or failures to fund and changes in the amounts actually funded from the amounts required to fully fund the transaction. All of these problems can be avoided by requiring that all transactions are funded in accordance with the above, prior to your disbursement.

I frankly cannot believe that there are still title agents out there closing and disbursing without having good funds in hand.  Can you?

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