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All money changing hands between the Parties must be reflected on the settlement statement and approved by the Buyer’s lender. Before negotiating any credits or escrows, always be sure to check with the lender and the settlement company to make sure that credit/escrow complies with all lender and title company requirements.
The lender must approve any escrow, even if it’s only impacting the Seller’s proceeds. Why? Because an escrow could result in additional monies going to Buyer after the closing which may not be allowed by the lender’s underwriting guidelines.
Agent credits to a client must also be approved by the lender. If the loan is already out of underwriting, the lender may not be able to approve the credit.
The Settlement Agent cannot unilaterally approve an escrow or credit without lender approval. The Settlement Agent certifies to the lender as part of the closing package that the settlement statement is accurate and there are no additional monies changing hands that are not already disclosed on the lender approved settlement statement.
This article is not intended to provide legal advice. This email does not create an Attorney-Client relationship, and nothing set forth herein is to be construed as legal advice or as a substitute for the advice of a duly licensed attorney. Seek legal counsel from an attorney admitted to practice in your jurisdiction if you need legal advice or representation.
