The Life of an Escrow

 

The life of an escrow is perhaps the number one reason to use experienced Realtors, Loan Officers, and Escrow Officers. It can be a very complex process and everyone needs to do their job to get things done on time.

The Escrow Officer is pretty much the quarterback of the transaction. They coordinate most of the activities, ensuring each step is completed. A good Escrow Officer will keep the transaction on track. It is not uncommon for an experienced Realtor to refuse to work with an Escrow Officer who has a bad track record. The Loan Officer can make or break the transaction. Two Loan Officers may broker a loan out to the same investor, but the good Loan Officer
will ensure that all conditions are met, the appraisal is taken care of, and that it gets through underwriting smoothly. While a Lender's costs and rates are important, just as important is their reputation for getting things done on time.

 

The Realtor's job is to make sure everything is done. Where the Escrow Officer keeps tabs on things, it's the Realtor who usually actually completes the tasks. Fortunately, the Seller and Buyer usually want the transaction to close on time, so both Realtors tend to work for a common goal.

 

Once the contract is negotiated and signed, the Buyer and Seller really have little to do. The Buyer must expeditiously get the Lender all required items, but aside from signing the documents, has little else to do. The Seller has even less to do, as they aren't even working with a Lender. Below are the tasks for each party.

The Buyer(s)

• Makes a written offer to purchase or accepts the Seller's counter-offer.
• Submits an Earnest Money Deposit (EMD) to the Escrow Holder.
• Approves and signs the escrow instructions.
• Approves the preliminary title report and any disclosures or inspection reports.
• Approves and signs new loan documents.
• Deposits funds necessary to close the escrow.
• Approves any changes by signing amendments in the escrow instructions.

 

The Lender (when applicable)

• Accepts the new loan application and other related documents from the Buyer(s).
• Provides a good faith estimate of the closing costs.
• Orders and reviews the property appraisal.
• Orders and reviews the credit report, verification of employment, and verification of deposit(s).
• Submits the entire package to the underwriters for approval.
• Informs Buyer(s) of loan approval terms and commitment expiration date.
• Providesthe loan documents and instructions with the escrow holder.
• Reviews and approves the executed loan package.
• Coordinates the loan funding with the escrow officer.

 

The Escrow Officer

• Receives an order for escrow and title services.
• Orders the preliminary title report and examination on the subject property.
• Acts as the neutral third party for all documents and monies.
• Prepares the escrow instructions and required documents in accordance with terms of the sale.
• With the authorization, orders demands on existing deeds of trust (mortgage) and liens or judgments, if any.
• For assumption or subject to loan, orders the beneficiary's statement or formal assumption package.
• Reviews the preliminary title report, payoff or assumption statements, and new loan package.
• Reviews the conditions in the lender's instructions including the hazard and title insurance requirements.
• Presents the documents to the principal(s) for approval and signature.
• Requests the balance of the buyer's funds.
• Reviews the proceeds of the loan(s) from the lender(s).
• Determines when the transaction will be in the position to close and advises the parties.
• Records the deed, deed of trust and other documents required to complete the transaction.
• Prepares the final settlement statements.
• Disburses the proceeds to the Seller, paying off the existing encumbrances and other obligations.
• Delivers the appropriate documents to the principals, agents, and/or lenders.

 

The Seller(s)

• Accepts Buyer's Offer to Purchase.
• Approves and signs the escrow instructions, grant deed and other related documents.
• Approves final reports and/or repairs to the property as required by the terms of the agreement.
• Fulfills any remaining conditions specified in the contract and/or escrow instructions.
• Approves the pay off demands and/or beneficiary's statements.
• Approves any final changes by signing amendments to the escrow instructions or contract.

 

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