Home Buying in 91101>Question Details

Pezzoreamer, Home Buyer in Pasadena, CA

how long does it take for loan docs to expire?

Asked by Pezzoreamer, Pasadena, CA Sat Jan 2, 2010

our loan docs were drawn up on the 12/24 and we signed it on the very same day. The escrow didn't send it out to the seller (REO property) until 12/30. Now my broker is saying we need to get the banks signature by monday 1/4 or the loan docs is going to expire by tues 1/5. My question is how come the loan docs expires so quickly and also is it possible to get an extension.

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Pezzo,

As a lender, I can tell you that loan docs are technically good for the month in which they were drawn (December). However, most lenders will give anywhere from the first 5-7 days into the next month (Jan 5th -7th) to fund (depending on Lender). If you pass these amount of days, then yes they must be redrawn. This does not mean the lock expires rather than the lender must get the loan docs to reflect the current month's date. This can delay your loan further (depending on lender) as it can take anywhere from 2-5 days to get the docs redrawn, again depending on the lender. That also means the docs will need to go back to the seller-bank for re-signing which isn't going to bode well and can take an additional 2-4 days.

In short, it really isn't that big deal other than a delay resulting from re-drawing and re-signing the loan docs. Come to think of it, that may be a big deal but that came down to your current lender releasing loan docs in such short notice. If they would have gotten them out earlier, you wouldn't be dealing with such a crunch.

Ted Canto
Direct: 480.650.8602
0 votes Thank Flag Link Sat Jan 2, 2010
Come to think about it.. Escrow companies have been really crapp lately.. I can and have seen escrow companies totally mess it up and moreso if they are an REO Preferred Escrow/Title company. Customer service...
Well there is none.
0 votes Thank Flag Link Sat Jan 2, 2010
Thanks for the answers. My broker is blaming the escrow for sending out the loan docs so late after it was drawn up. He suggested I call the escrow, my agent, to rush the escrow and the seller to get that signature in by monday.
0 votes Thank Flag Link Sat Jan 2, 2010
Hi Pessoreamer,

The expiration normally refers to the number of days you from your lock date, not the number of days after you signed docs. You have to find out when you locked your loan and how long the lock was for.


Gary Gukassian
Beverly Realty
mrggg@aol.com
818-303-4093
0 votes Thank Flag Link Sat Jan 2, 2010
Hi Pezzoreamer, first, there are two types of "loan conditions" to be aware of:

1) Prior-to-doc (PTD) conditions are those that must be satisfied before the lender’s underwriting department will generate and send loan docs for you to sign at escrow. Since loan docs were generated, you satisfied any PTDs.

2) Prior-to-fund (PTF) conditions are those items that must be satisfied before the investor will “push the button” to send your new loan funds to escrow. You may want to ask what specific PTFs remain unsatisfied.

It is a bit odd that your loan docs, if actually generated on 12/24, would be expiring so soon. In any case, rather than an extension, you may need a loan doc redraw, which would require that you re-sign the new docs (there will probably be a fee associated with this as well).

There may be another element at work here. Loan docs can expire after being signed and before funding due to a PTD. A PTD condition that can cause a problem is the interest rate lock term, which varies between 15, 20, 30, 45, 60 days (longer locks are possible). If this lock expires before funding new loan docs will be required. Typically, you can avoid rate lock expiration by paying for a lock extension, which also avoids having to produce new docs and the payment of a “re-draw fee”. Fees for a re-lock are based on the duration of the extension and the lender’s individual fee structure.

Best, Steve
0 votes Thank Flag Link Sat Jan 2, 2010
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