When The Loan Got Sold
And You Just Closed Escrow

The loan got sold while the property was in escrow? What kind of consequences are we looking at?

We all know that loans get sold from one lender to another all the time. Normally, it is no big deal; the borrower just gets the notice and starts making payments to another lender. Or, if a loan servicing company handles the collection of the loan payments, the borrower may not even know that the loan got sold.

Once in a while, this happens to a loan on a property that is in escrow and being sold (or refinanced) and a whole set of problems come up. One of our Sellers found out the consequences the hard way. Here’s the story:

The Seller provided us with the payoff lender information and we got a statement of amounts due. At closing, the loan was paid. We were alerted of a problem a few days after when this lender called and advised us that they no longer had this loan on their books. The loan was sold a few weeks prior. Did we panic? Yes, we always panic when a large sum of money is sent to the wrong place. Was this resolved? Yes, but not immediately. First, we had to get the money back from the old lender. Then we had to approach the new lender and get a new statement of amounts due. Finally, we wired the new figures to the new lender. All this took time and the interest kept on accruing on a daily basis. 2 extra weeks of interest had to be paid over and beyond the original payoff amount once everything was resolved.

Was the Seller happy? No, definitely not. But if he had alerted us during the transaction that he had received notification that his loan had sold and payments were to be made to a new lender, we would have immediately contacted this new lender. No panic attack, no extra interest.

The moral of this story: When you have a transaction in escrow, communicate, communicate, communicate! Communicate directly to your Escrow Officer. Pick up the phone and call. Explain the situation. Let him/her make the determination on how a certain scenario affects your transaction. There is no guarantee that telling someone else means that the message will be forwarded to the Escrow Officer. When the Escrow Officer finds out, it may be too late. Unintended consequences may have already happened and then becomes a matter of scrambling and conducting escrow triage. Ouch!

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Mario Artiga
Mario Artiga
Escrow Officer
“It’s All About The Service”

Mario, a Certified Escrow Officer, joined Viva Escrow in 2012 as an assistant to Juliana Tu and has since grown to full Escrow Officer. His excellent communication skills, his commitment to good service, and his fluency in Spanish have made makes him a favorite among clientele.

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