We briefly discussed demands (the documentation provided by the lender of what the borrower still owes on a loan that’s about to be paid off) a few days ago, because I was dealing with a particularly irritating lender who was taking forever to issue a demand.
You’re not going to believe this, but the lender is still playing at silly-buggers (this is an expression I learned from Lucy and it totally fits).
First, the lender delayed getting us the demand until the 29th or so for closing on the 31st. That didn’t give anyone enough time, so we agreed to move closing to the 6th.
Then, the lender announced today that they only allow payoffs of their loan at the end of the month, so we have to wait to close until the end of November or pay a penalty to close sooner.
I’ve never heard of a lender inserting a clause like this into loan docs, so I looked into it a bit. Turns out it’s not allowed on 1-4 unit loans. 5+ unit loans are a different story, because its assumed by the regulators that everyone involved is a big boy (or girl!). In this particular case, the borrower signed this ridiculous loan, presumably without considering the implications for a sale. So, we’re stuck.
Now, should we, the listing and selling brokers, have known about this? I’ve never had this be an issue on the 30+ deals I’ve done in the past few years. And the listing agent hasn’t seen it either in his 30+ year career. So neither of us thought to ask the seller if there was anything in the loan docs that would prevent closing on the 6th. And escrow, whose responsibility this is, didn’t think to check either.
You better believe I’m checking from now on before I agree to any closing dates. And, I recommend that anyone considering signing loan docs look carefully to see whether this ridiculous clause is included.