Funding vs Recording?

[Mike Boyd]

"Funding" is when the lender sends the money to the title company or escrow holder. Usually, by that time all documents have been signed....but not always. Funds could arrive late on a Friday before a 3 day weekend. Recording would not take place until the following Tuesday. (or Monday if not a 3 day weekend). There are FUNDING INSTRUCTIONS given by the lender. Their instructions might include receipt of an appraisal review or any number of other things. The funds are held IN ESCROW until all requirements are met. Then and only then, is distribution of the funds made. Most lenders will issue funding instructions prior to sending the money. Remember, WAMU or B of A and other giant lenders may be funding zillions of dollars every day. They do not start earning interest on those zillions until the loan is recorded. So, they will hold on to the funds for as long as possible. I have seen different proceedures. One that comes to mind that mandates the loan be closed the same day the funds are received by the title/escrow company. If there is even one day delay, their instructions were to collect interest on the loan from that date to the recoding date which are then added to the borrower's closing costs. Do not confuse FUNDING with DISTRIBUTION of funds.

 

[Mike Boyd]

Title/escrow companies typically have specific hours of each day to record. In large cities and counties that eliminates long lines at the recorder's office as there may be 20 or more title/escrow companies recording that same day. All other documents such as liens, leases, births, deaths, etc. are recorded at times the title/escrow companies are not doing their thing.