What are Prior to Documents and Prior to Funding Conditions…? Some “inside baseball” talk from a Real Estate Broker’s point of view
Let’s talk about “prior to doc” conditions first.
What I’m describing here are conditions that the Lender has required that need to be met “prior to the issuance” of loan documents” to the escrow holder for the Buyer to sign.
Generally these will be and have been issues primarily regarding the Buyer’s credit worthiness such as, verifications of employment, verification of and source of down payment, verification of income and income sources, etc. Basically qualifying the Buyer based upon the Lender’s loan criteria to be able to make the payments on time consistently.
If some of these criteria have not been totally satisfied, what Lenders do most of the time is to issue a statement that the Buyer has qualified for a loan “subject” to conditions that must be met before they will even type up the loan papers to be delivered to the escrow company for Buyer’s signature. In other words, these conditions are serious enough the Lender won’t even draw up the documents until they have been met.
When those conditions are finally met, loan documents are issued to the title company with a list of conditions that must be met “prior to funding” the loan.
Prior to Loan Funding Conditions.
These are the conditions that must be met before the lender will issue their funding check/wire to the Escrow/Title Company and allow the sale to close.
Generally these are conditions that provide for, not only that all of the documents must be properly signed and notarized, they will also include items such as providing proof of adequate Hazard/Fire insurance, obtaining Pest Control and/or Roof Clearances/Certifications along with a commitment from the Title Company that they will issue a policy of title insurance in their favor at close of escrow.
So why does Bank of America now have a Pest Control Clearance as a “prior to document” condition..?
We’ve got a single family home listed for sale at 125 Rambling Drive in Folsom that has been in a “pending sale” status for about 6 weeks now.
I’ve been in the real estate business for a while going back to 1981 and this is the first time I’ve ever seen a transaction that required the Seller to provide a Section 1 Pest Control Clearance prior to the bank issuing their loan documents.
Since this transaction is a short sale and this condition was not provided for in the short sale approval letter, it absolutely amazed me this was required by the Buyer’s lender.
The only way this condition was satisfied was because the Buyer’s agent decided to pay approximately $1,000 to the Pest Control Company so they could complete the work & get the clearance which she then delivered to Bank of America’s processing center here in Folsom.
So with all that said, as of today, we still don’t have documents delivered to the escrow company from the Bank.
Looks to me like the Lender Criteria and Approval Process is really becoming a monster of a paper mill. When you have a well qualified buyer with great credit and an appraisal that didn’t call for any pest work to be completed, why is Bank of America making it more difficult to close an easy transaction..?
Just another day in Real Estate..!
Make it a Great Day…!!!
Ed Favinger, Broker CRS, GRI, SFR favinger@rwnetwork.com 916-203-1260
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