Real estate closing - title company did not wire money day of sale. Are they required to?

Question

I closed on my home sale on the 21st. The funds were not received by my mortgage company until the 23rd. The mortgage company refused to credit funds because they were short two days interest, so it was the 24th by the time that additional funds were sent and my mortgage paid off. They are billing me for interest on the mortgage from the 21st to the 24th for the full amount:
1. Isn't the title company required to wire the money immediately? They are telling me they have three days to do it and I have to pay interest for the three days.
2. Isn't the mortgage company required to credit whatever funds they do receive immediately? They say no, they have to wait for full amount. They are charging a days interest on the whole pay off amount even though they had all but 85 dollars in there possession.

Answer 1

im not entirely sure, but i work in an office that does real estate closings and if we dont have ALL the money needed we dont fund. and if its the end of the day when you close say 4pm and the closing is not done in enough time it can be the next day before funding occurs. we usually request a payoff from the mortgagor with a certain due date preferably 3 days after closing date to give time to get it there...but that usually includes interest all the way up to the due date...so that theres' not unexpected interest/fees after the day of closing.sounds like a sticky situation...since i dont work for either company involved i couldn't tell you why it was done that way.

Answer 2

This answer is limited to states where there are table closings as opposed to escrow closings.

I can understand a certain amount of frustration regarding the situation. However, it isn't always the title agent's fault

First, most states have a "good funds" statute that requires a purchaser to pay the balance of the sales price by wire transfer or cashier's check. Lenders like to issue bank checks which often have deposit holds. Also, the purchaser may pay a balance by personal check. Again, there is a hold on the funds.

Second, although the documents have been executed, the funding could have been delayed. Often, there are closing conditions that must be satsified by the purchaser. For example, a gift letter for the downpayment could be a requirement. If no gift letter is presented at closing, then title agent has no authority to disburse - even if funding is received.

Third, if you close after 2 p.m. or if there is a problem with funding, the payoff can be delayed. The title agent can't disburse until the funds are received. If a wire is not credited until the next day, they can't wire out after their bank's cut off time for wires.

To protect themselves, title agents usually factor in 2-3 days of interest for the payoff and require the execution of a disclosure (actually a release) that states that they are not responsible or liable for shortages in funds.

As to your questions, Question 1 is state specfic. There is no federally mandated time for delivering payoffs. It is state specific. More importantly, if you don't pay for wire transfers (which do cost money to the title company), then the title company can simply overnight a check. Question 2 is easily answered: No. Title companies don't make partial payoffs.

If you really expect immediate payment on a mortgage payoff, then you need to write into the contract a specific time for the purchaser's closing in the A.M. and need to specify that the funds to pay the balance must be paid by wire transfer only.

Answer 3

Your state likely regulates title companies, so check with the appropriate regulatory agency, but I imagine this is not a violation of any regulation but instead is more a lack of professionalism.

The title company should have made sure there were a sufficient number of days interest added to the payoff to insure this didn't happen, but they obviously let things slip through the cracks.

The lender may have the option of accepting the funds but I can assure you they're not obligated to do so....if the loan is going to be paid off and the account closed, the full amount will need to be in their hands to do so.

Pay the interest and move on because it's hardly worth your time or energy on such a small amount.

This is one of the major reasons I no longer use title companies to close transactions and instead use an attorney.

Answer 4

I don't think you have any recourse but to pay the interest. It's your responsibility to pay the mortgage as long as you owe the money. You would have been better off making another payment - basically overpaying the mortgage company - and having them issue you a refund check after the deal was completed.

As it is, you had a loan 3 days longer than you thought you would. And, as such, you had to pay for it 3 days longer than you thought you would.

On the plus side, however, that three days of interest you paid is tax-deductible.

Answer 5

I would go back to title company and ask for a refund.

Answer 6

This topic is worth people's attention

Answer 7

Thankyou all for your answers and opinions.

Answer 8

This is a good question