Part Four of the Loan Process
Funding and Closing of the Loan
Depending upon how the lender is organized, the Loan Funding/Closing Department or the Document Preparation Department will (subsequent to loan approval) prepare and complete the documents and instruments required to evidence and secure the intended loan as well as the federal and state disclosures and notices of rights to which the borrower is entitled. A loan closing and funding checklist will be added to the file to ensure all appropriate documents/instruments are included. In addition, lender’s escrow instructions will be prepared and transmitted with the documents, instruments, disclosures, and notices of rights to the escrow holder for the signature of the borrowers.
The mechanics of closing the loan will vary. For the sale of a residence, an escrow holder is usually handling a sale transaction between the seller and buyer and a loan transaction between the lender and the buyer/borrower. In a loan transaction where no sale is involved (i.e., a refinance or further encumbrance of the security property), the escrow holder’s assignment will be limited to escrowing the intended loan as well as obtaining the signatures of the borrowers on the loan documents, instruments, disclosures, notices of rights and escrow instructions necessary to close the loan transaction.
When the lender’s instructions have been complied with, no conflicts remain or exist in the instructions of the principals, and the lender approves the documents, instruments, agreement, disclosures, etc., as executed; the lender sends/wires the loan funds to escrow. Upon receipt and verification of the loan funds, the escrow holder transmits or causes to be transmitted to the county recorder for recordation the appropriate instruments conveying or encumbering the title to the security property as instructed by the principals of the escrow. The escrow holder confirms the recording and then proceeds to order the requested title insurance coverage.
Subsequent to recordation and close of the loan escrow, the escrow holder distributes the loan documents, instruments, agreements, disclosures, etc., pursuant to the instructions of the principals of the escrow that were not otherwise previously delivered. Loan funds are disbursed in accordance with the foregoing instructions.