"Dry" Closing Fee is Here

At real estate closings, about 50% of the time there is a “dry” closing (meaning that no money is disbursed and the closing is on hold), usually because the mortgage lender has not wired the mortgage funds to the closing yet.

This makes the following people irritated (for good reason):

1.The seller is mad, because she doesn’t get her money until the wire is received.

2. The buyer is mad because she doesn’t get the keys to the new house and can’t move in (even if the moving van is in the driveway).

3. The real estate agent is mad because he doesn’t get paid.

4. The attorneys are mad because they have to deal with people who are mad.

5. The closer for the title company is mad because she has to deal with people lurking around all day asking “did you get the wire yet” and a one hour closing drags on for 5, 6 or sometimes 24 hours or more.

Something has to be done to force mortgage lenders to get the money to the closing on time. Some title companies (ATG for one) now charge the Buyer a dry closing fee of $100 if the money for closing is not there at the closing. I have mixed feeling about this. First, the Buyer is already mad because she can’t move in; charging her $100 will make her borderline psychotic. I refused to let my Buyers pay this fee recently and the lender paid it instead.

If everyone knows in advance that this fee will be imposed, I think charging a dry closing fee is a great idea. The Buyer is responsible for choosing the lender and should be held accountable for this decision to some extent. But people buy homes only once every 10 years or so and don’t really understand the behind-the-scenes stuff anyway. IF this fee is charged by all title companies, the buyer will have to get his or her lender to agree in writing to pay the fee if the funds are not there at closing. I think this will happen if title companies start charging the dry closing fee.

The solution: Don’t use an out-of-state lender or internet lender. Check with your mortgage lender in advance and insist that the funds be wired the day before or, better yet, that a check be at closing.

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