The Remote Financed Closing.
Because documents are signed remotely (not in the same near geographical vicinity as the property) and are generally sent via FedEx or other carrier, the original signed buyer documents may not arrive at the title company office until the following day or even later.
Unfortunately, the lender very often requires the title company to be in physical possession of the original closing documents to authorize the title company to release the funds. This means that the title company cannot close and fund, and buyer will not own the home, until this process completes.
Obviously, the easy way to deal with this is to get the lender to send out the documents for the buyer to sign AHEAD OF TIME, so that the buyer has them on the business day BEFORE closing, giving the buyer ample time to sign and FedEx the documents back to the title company so that the documents arrive ON THE CLOSING DATE, and the transaction can then close on that date.
HOWEVER, there are TWO problems that often arise on this:
(1) some lenders (but not all) will not ALLOW the buyer documents to be signed the day before closing; they must be signed on the actual closing date and
(2) a large number of lenders wait to the very end to prepare closing documents, so the documents are not READY the day before closing to be emailed or send FedEx to the buyer for execution. As you can tell, this is something of a “Catch-22” that often means that out-of-town buyers CANNOT technically comply with the contract, resulting in a potential default.
Each lender will have its own policy with regards to acceptable conditions to fund. If you require that your property closes and funds on the contracted closing date it is your responsibility to discuss with your lender what their process entails and to request that they send the closing package to the title company at least a day or preferably two days before close. This allows the title company to create the closing package for lender approval and to be able to send you as buyer the documents either directly or via a mobile notary to sign prior to the closing date.
Again, some lenders insist that closing documents must be signed / dated on the contracted closing date, which may not be possible if you are signing remotely. That makes it imperative to discuss with your lender what is acceptable for their policy and to coordinate with the lender, the title company and your Realtor to find out what will be required to ensure the sale is closed and funded on the contracted closing date.
In some rare cases, it may be necessary to amend your purchase contract to allow for funding the business day after the closing date, or otherwise keep seller informed.
Notarization of Documents
A lender will insist on certain closing documents be signed by a notary. Notary services are abundant in the USA but can be tricky to find elsewhere. It is very important you locate a notary service if you are a foreign national buyer. In some cases you may even need to visit the US Embassy. It is imperative you discuss this with the lender ASAP to ascertain exactly what they will require.
Once you understand the lender policy, locate a service comparable to the lenders needs and find out location and schedule for appointments.
Try to make an appointment ASAP and consider making a second back up appointment also.
Do not underestimate how important it is to get this process arranged correctly.
The UK Notaries Society
Cash transactions are considerably less complicated then financed which makes it much easier for the title company to complete the closing documents and get the final paperwork with the “cash to close” amount to you so you can send the funds ahead of the closing date to complete the transaction. Make sure you have all the necessary funds to close in the account you intend to use to transfer.
It is advisable to add $100 to the amount sent in case there are wire fees deducted – leaving you short. Any overage will be returned to you so it will not cost you anything extra and may save you having to wire additional funds to cover any shortfall.
Get the cash to close to the title company at least one day before the closing day.
Cash transactions do not require the use of a notary and all documents can be signed electronically making the process easy and convenient.
Foreign National Cash Transactions
If you are a foreign national buyer it is advisable to have the cash funds in the FX exchange program.
We do not recommend as a foreign national buyer to have your funds to close in a US account. US banks are notorious for insisting that clients are in country to place a wire transfer in person for high dollar amounts. If you intend to transfer directly from a US bank, discuss with the bank in advance of their wiring policy.
Check with your bank if you are not using an FX account and ask how the process works and how long it will take. Make sure they can get the funds to the title company on the closing date.
Wiring the Funds to Close
Title companies request the funds are WIRED directly to the title company escrow account. The wiring instructions will come DIRECTLY from the title company. This is important to avoid any potential fraudulent wire transfer activity. Ensure you receive the title company wiring instructions directly. We will never give you account information nor should you use it from any other source.
WIRE FRAUD PREVENTION NOTICE
Criminal/hackers are targeting the email accounts of various parties involved in real estate transactions (e.g., lawyers, title agents, mortgage brokers, real estate agents). These emails are convincing and sophisticated. This illegal activity has led to fraudulent wiring instructions being used to divert funds to the criminal’s bank account. These emails may look like legitimate emails from a party to the transaction (e.g., lawyers, title agents, mortgage brokers, real estate agents). If you receive an email regarding wire instructions, do not click on any links which might be in the email and do not reply to the email.
You must call the Sender of the email for verification, and when calling the Sender, use a number that is independently obtained (e.g., from your contract, the recipient’s website, etc.). DO NOT USE THE PHONE NUMBER IN THE EMAIL.
In addition, before Buyer or Seller wires any funds to any party (including Buyer or Seller’s attorney, title agent, mortgage broker, or real estate broker) personally call them to confirm the information is legitimate (i.e., confirm the ABA routing number or SWIFT code and account number).