Understanding the terminology of “loan docs”

signing-docsBack in February of 2006 I took the time to type out an outline of everything that happens with a real estate transaction, and color coded it to reflect who does what. I called it Anatomy of a Real Estate Transaction, and I did it backwards from the end to the beginning. Many have found it helpful, but it may be time to re-write it, though I don’t think much has changed since then as to how an escrow starts and ends.

Recently with loan processing becoming a bit more difficult than it was back in 2006, I have noticed a lot of confusion regarding the terminology used by lenders and agents and escrow at the end of the transaction.  In the 2006 post I said:

***This one little line is THE MOST IMPORTANT PART OF ANY REAL ESTATE TRANSACTION INVOLVING FINANCING!  And yet, I purposely put it there as quietly as it happens, no fanfare, no bold lettering, no all caps, to notice to all parties.  “Docs are in” – A quiet little event between the lender and escrow that is clearly THE BE-ALL-END-ALL OF EVERYTHING!*** 

There are actually three things that happen at the end of a real estate transaction where the buyer is using a mortgage to purchase.

1) Docs are ORDERED

2) Docs are SENT

3) Docs are IN

This is the nail biting stage of every real estate transacton. 

Often the confusion regarding the last word in those three stages creates many phone calls back and forth due to a misunderstanding of the terminology.  This happens often enough that I thought it would be helpful to those buying and selling homes to highlight the distinction in a separate blog post.

Often the buyer will say “lender said the loan documents are at escrow” when what the lender really said was the loan documents have been ordered.  Sometimes the lender says the loan documents have been sent, which is not quite the same as their being in escrow.

If you are buying a home you want to make sure your lender is instructed to notify you TWICE. 

You want to be notified when the docs have been ORDERED, as that pretty much means your loan is really fully approved and out of underwriting.  It also tells you that you likely are pretty much “done” and on your way to closing.  It also tells you to start preparing to go and sign your closing documents, as most escrow companies will not sechedule a signing appointment until they receive the loan documents.

You also want to be notified by the lender when the loan documents are SENT, especially if you need a little advance time to clean up your desk, or give your boss a little notice that you will likely be leaving work to go sign your closing papers. The closer the loan documents are ordered to the actual closing date, the less time you will have to give your boss notice that you need a little time off or a longer lunch to sign your closing papers.  These two cues: Docs have been ordered and Docs have been sent, can be pretty important if you can’t just jump up and leave work without notice.

Unlike states that don’t have escrow, where people have 30 days or more notice as to what day they need to take off from work to go and sign their papers, escrow states require that the buyer sign at least a day before closing. In WA and CA, closing is a phone call, often between 4 and 5 p.m., so taking off from work “on closing day” is not usually needed.  In fact, if you do take off on closing day, be prepared to be sitting around staring at the wall waiting for a phone call before you can get the keys and start moving  into the house.

I am currently waiting for “docs” on two closings.  In one “docs have been ordered”, on the other “docs have been sent” on neither have docs made it to escrow.  As the agent, I wait impatiently for docs to be IN so I can review the closing numbers for my clients.  One is a seller, so those numbers are not loan document sensitive and final numbers have already been reviewed and corrected at my end, and the seller has already signed their closing papers. 

On the other, I can’t review the final numbers for my buyer client until the loan docs are IN, as escrow prepares the Buyer Closing Statement after receiving those loan documents.  We are pretty sure what the numbers should be…but given the documents are “late”, I vigilantly watch my email and phone so I can review the numbers immediately.  I don’t want to be part of  the delay on a closing, by not being available to review the final numbers within 15 minutes of receiving them.

“docs have been ordered” is the breathe a little easier cue.  That usually converts IF it will close to WHEN it will close. So asking your lender to notify you when docs have been ordered, is a very good idea.

Life in escrow: When we compete with American Idol.

There is only so much escrow can do when escrow receives loan docs at 5pm and the borrower must sign because an interest rate lock is about to expire and the rescission period puts their back against the wall, forcing them to sign the very same day (evening). Then the borrower (s), strangely unaware of the urgency, indicates:

1. Can you come to our house between 7:00-7:30 because American Idol is on at 8pm (like tonight, cough-cough) and we can’t miss it. Or, how about after the program is over?


2. I drop Billy off at Basketball at 6:30 and pick him up at 7:30, so I won’t be home until 8:15 pm. Will 8:30 pm work for you? Oh, my spouse needs to sign as well? He does not get off his shift until midnight. Is that a problem?

Will these transactions close on time? If you do what Ardell suggests in Step #2, it is a sure thing..

I’m beginning to muster up the courage to ask management for new business hours: M-F 8-5pm; quick hour break for a run to Panda Express, sprint any last minute disbursed loan Payoff’s to the UPS terminal blocks from our office to make it on an airplane to wherever, do banking before the bank closes at 6pm; hustle back to the office, quickly re-check e-mail for more “last minute” loan docs promised days earlier, and then re-open from 6pm until midnight for signings from Bellingham to Olympia to Ephrata. Sat. and Sun. leave wide open for signings too.

Escrow Signings: your place or ours.

Escrow Signing

This place, while “very rough”, was not the worst. We’ve been to some very remote and isolated areas. While escrow firms go way out of their way to assist agents and loan officers in closing their transcations for our mutual clients, you can see why courtesy signings outside of normal business hours or far distances are not free.

We’ve signed clients from one extreme to the other: in jail at 9pm at night a couple days before Christmas when no one should be working, to the Columbia Basin dust bowl of Ephrata in eastern Washington; the Columbia Tower Club in downtown Seattle to everyone’s second office, Starbucks!