Thursday, February 3, 2011

The Life of a Settlement File

Earlier this week, we shared with you who does what at a title company. Loyal reader Ken Montville commented that it may also be helpful to provide a timeline of what happens from the day we receive the contract straight through to settlement and document recording. We liked that idea, so here goes...

Order Entry: This happens immediately upon receipt of the contract. The case-specific data (party names, property address, sales price, etc.) is entered into the title software, and letters are emailed out to agents, buyers and sellers introducing ourselves and soliciting some important transaction-related information.

Title Search and Examination: Immediately upon receipt of the contract, a title search is ordered from a title abstractor. Within 5-10 days (on average - that number can change depending on the complexity of the search), a search is performed and reviewed by one of our title examiners. Issues are communicated, and where possible cured. A title commitment is sent to the lender. If major issues are found, they are communicated to all parties (buyers, sellers, real estate agents and the lender).

Taxes and Payoffs: Tax, water, and sewer departments are called and current figures are added to a preliminary HUD-1 Settlement Statement (HUD-1) . Payoff figures for any seller mortgages or liens are requested, received, and entered on HUD-1. Taxes can typically be ordered right away, but for payoffs we want to wait until the closing is scheduled. Why? Because payoffs expire - they're only good through a certain date.

HUD-1 Completion: This occurs as early as a week before settlement, but more likely the day before. Once the lender’s figures are received, they are entered on the HUD-1, which is finalized and sent to the lender for approval. Once approved, it’s on to settlement.

Settlement: The big event! An attorney or licensed settlement agent conducts the closing, facilitating the execution of all documents.

Recording and Post-closing: Several documents (typically the deed and mortgage/deed of trust) go to the county for recording. The remainder of the documents are bundled and sent to the lender. Finally, the file is disbursed and all funds that have come in are disbursed out in accordance with the HUD-1.

The entire process from contract to closing typically happens in 30-45 days. Naturally, any number of factors can affect that timeframe. We've closed some cash transactions in 2 business days, and we still have some REO files that were opened in 2009. The key - as always - is to get complete what is in our control in a timely fashion, and communicate with the parties early and often!

Flickr photo by net_efekt, as modified by me.