To understand why this role is so important, let’s look at all of the people involved in the loan process and how they all fit together. There are many different people involved in working to successfully assist the borrower with a loan. In the following section we will go through these people and processes in some detail.
Let’s start with a high-level view of the process:
First, a borrower, either because of the real estate purchase or refinance will meet with, call or increasingly today, through the web, will contact a lender or broker and apply for a loan.
Then a mortgage company, the lender, or a loan broker will complete the loan application form, which is known as the ten zero three (1003).
Following this step, the lender or the mortgage company will have loan processors who will collect all the information required to approve the loan. Let’s remember that the lender is the bank, the credit union, or entity who will actually be loaning the money to the borrower, whereas the mortgage company is the middleman who gathers all of the information in order for the lender to approve the loan.
Once all the documents are assembled, and the loan is approved, the lender funds the loan by sending the money to the title company. The title company pays off any liens on the property, following instruction outline for them by all parties, and sends the balance of the funds to escrow.
Finally, all of the final paperwork is prepared, and the funds are disbursed to all parties. Then the escrow is “closed”, an important even in the loan process!
So with this high-level process in mind, let’s look at all the parties involved and talk about what each does.
First, as we all now know, there is the Notary Signing Agent. We of course are responsible for obtaining and notarizing the borrower’s signature on the documents and returning the documents in a condition that is ready for funding and in a timely manner.
The underwriter works for the lender. The underwriter is the person responsible for reviewing all the information about both the borrower and the property and all aspects of the loan. Underwriters are provided all of the paperwork and documentation, and then they have the ultimate responsibility to approve or disapprove of the loan based on all of the criteria used by the lender under the law, and based on all the data and documentation submitted to them.
Escrow is the disinterested third party in the transaction. Escrow holds the documents and the funds until such time that the transaction is ready to be completed. At that point the documents are recorded, funds are disbursed, and then escrow is closed. In some states, such as California, there are Escrow companies, in other cases title companies manage this process. A lender will open escrow with either a title company or an escrow company, both which have Escrow Officers. So, Escrow officers are the specific people within the Title Company or Escrow Company who oversee this entire process. They are responsible for keeping everything clear and organized, and this can be a challenging and stressful job!
The Title Officer is the individual who initiates a search of public records to collect and evaluate the information about the property being purchased. The information about the property includes things like liens, any easements, really any facts about the property or ownership of the property. All of this information is all put into a report, in most states usually called a “Preliminary Title Report”. Once the preliminary title report has been completed a copy is sent to both the lender and escrow.
Let’s take a more detailed look at title and escrow and how they work together, and a little closer look at the responsibility of the various parties involved in the process of the loan closing. Most people don’t have any idea what the title officer or the escrow officer’s roles are in the real estate transactions. It is important for you as a signing agent are aware of the important role they play in this process. In addition, you need to understand how important your role is also so that you do not cause anybody to lose their paycheck because you manage to do something wrong!
The title officer is responsible for recording the documents, paying off the lean, printing off the instructions from lenders, and issuing a title policy at the close of escrow, therefore, ensuring that the property is free and clear of all unwanted liens or other encumbrances. In refinancing the title policy protects the lender. As a matter of fact, it is typically called a Lender’s Policy. The borrower was issued a policy of titling insurance when they purchased the property, and that insurance remains in effect until the property is sold or until the owners pass away.
The final process rests with the lender. When they are ready, the lender funds the loan by sending the money to the title company. The title company pays off any liens on the property per instructions and as noted they send the balance of the funds to the escrow officer. All of the final paperwork is prepared, and funds disbursed to all parties concerned and the escrow is closed.
One interesting note are the differences we can characterize as “the east and the west”. In most place in this country the title companies have both title officers and escrow officers. There are a few states where you have independent escrow companies—California being one of them. When Carol Ray, founder of Notary2Pro was an Escrow Officer, and then Escrow Manager she ran one of the largest and busiest escrow companies in the Southern California.
Another difference between the east and the west, is that in the west when an escrow is closed, usually all of the documents have been signed, the documents are ready to be recorded, instructions have been done, all of the funds are in, andeverything is ready. Once all of those things come to fruition the documents are recorded and then all the funds are disbursed and that is what is called The Closing.
However, in the east part of the country and many other states the closing means a meeting of all of the parties. Buyers, sellers, real estate agents, and lawyers all meeting around a table, usually in a title company or a lawyer’s office. It is at this meeting when they finalize everything, sign all of the instructions and the seller gets their check at the table and that is the closing of the escrow.
A signing service is a company that helps identify and book a Notary Signing Agent for a signing. It’s important to note that while signing services are popular and a convenient option for businesses, many lenders, title, and escrow companies hire Notary Signing Agents directly and do not go through a Signing Service. This is an important thing to remember in building your business!
As is obvious the Buyer is the party purchasing a property. Buyers can be individuals, couples, partnerships and businesses. As a Notary Signing Agent most often the buyers you work with will be individuals, married couples or non-married domestic partners, but be aware you may also see Limited Liability Companies, and other types of businesses.
Likewise, sellers can take as many forms as buyers, but obviously are the party selling!
Then there’s the loan processor. Loan processors package all of the information and documents, and once it is assembled it usually goes to a special loan processor within the lender who among other things usually prepare the documents for the borrowers to sign. Remember, not all lenders use the same method of preparation.