Monday, September 14, 2009

How Are the Final Loan Figures Prepared?

We're often asked what the process is for getting the HUD-1 Settlement Statement (the document that has all the final figures for the loan) prepared. Here you go:

• The underwriter issues the final approval for the loan, often referred to as the "clear-to-close".
• The mortgage broker lists the lender fees on the doc prep order form and sends it to the doc prep company (if he is acting as a mortgage banker) or the doc prep department at the lender (if he is acting as a mortgage broker).
• The doc prep company prepares the figures and sends the order to the title company.
• The title company adds their fees, prepares the settlement statement, and sends it to doc prep and the mortgage broker for review.
• Any necessary changes are made (the most common error is incorrect payees for the line item fees) and doc prep and the mortgage broker send the change requests to title.
• Any mistakes are corrected and the updated settlement statement is sent to doc prep and the mortgage broker for final approval.
• After receiving the final approval from doc prep and the broker, title prepares the final settlement statement and sends it to everyone.

This can all usually be accomplished very comfortably within two days. Although the actual length of time that any one person is working on the settlement statement is relatively short, it's important to remember that the broker, the doc prep company, and title all have other deals in their pipelines. A good mortgage broker will make sure that any final settlement statements move to the top of his priority list, but for doc prep and title, one settlement statement is the same as any other. Rushes are possible, but typically they are totally unnecessary. The real important part of this process is to make sure that the borrower has plenty of time to review the settlement statement with the mortgage broker, so that when everyone gets to the closing, there are no financing questions.

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