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What is a Mortgage Funder?

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A mortgage funder is responsible for fine-tuning the final details of your loan. They ensure all closing documents are in order and the mortgage funds make it to the correct parties on time so you can become the official owner of your home.

What does a mortgage funder do?

The mortgage funder works for your lender; they have several responsibilities related to finalizing your loan. Most importantly, they ensure the proceeds of your home loan go to the correct place.

Although you won’t likely ever speak to the mortgage funder, their job is essential to the completion of the home loan process. Here are some of the main functions of a mortgage funder.

Verifying that all documents are accurate

Before your loan can close, the mortgage funder ensures all details related to your personal information and the property are correct. For example, if you have a hyphenated last name, it has to be reflected correctly on your loan application, preliminary title report, mortgage (or deed of trust), homeowners insurance and appraisal.

Or, if the property address includes “Avenue,” it has to be exactly the same on all of your documents. It can’t be spelled out in one place and abbreviated in another.

Additionally, the mortgage funder confirms the property’s legal description on the loan documents, especially your title information and appraisal, since these documents contain the legal boundaries of the home.

Ensuring you get credit

When you first made the offer on your house, you probably had to make an earnest deposit as a good faith gesture of your intent to buy your home. You also likely paid $300 to $700 for an appraisal on your property.

The mortgage funder makes sure they have records of the home appraisal and any other fees you prepaid. They will also keep proof of your earnest deposit, so you get credit for prepaying those items at your closing.

If the seller is paying any of your closing costs, the mortgage funder will also ensure you get the proper credit by working with the escrow officer or attorney to balance the amounts due.

Finalizing your escrow account for taxes and insurance

The exact amount you need for your escrow account is not finalized until the end of your transaction since the figures will change based on the tax authority in the area you are buying. The amount you’ll need depends on what time of year you are closing — the closer you are to the next due date for local property taxes, the more money you will need to deposit in your escrow account.

The mortgage funder will also want to make sure you have your homeowners insurance set up correctly so that it goes into effect on your closing date. The mortgage funder will also make sure the invoice for your homeowners insurance gets to the title company, so it is paid in full with your closing funds.

Clearing any approval conditions

All underwriting conditions will need to be cleared before closing. For example, you may be waiting for your first pay stub at a new job, or you recently paid off some debt that is still showing up as owed on your credit report. The mortgage funder will work with the loan underwriter to confirm that the documents you provided are acceptable, and then they can clear your loan for funding.

Setting up the wire of funds to your escrow

Once your closing documents have been received and the mortgage funder confirms they are all signed and notarized correctly, the wire will be set up for your closing. Once your settlement company or attorney receives the funds, they’ll send the monies to the appropriate parties, and the deed can be recorded in your name.

How to ensure a smooth funding process

Your loan is not complete until your lender provides the funds, so you want to avoid making common homebuying mistakes such as any changes to your income or credit before closing. The mortgage funder will likely work with a quality control department to re-verify your employment and credit to make sure there are no changes. If there are, there could be major delays and problems.

Keep your current job

Depending on the loan program, some lenders may confirm your employment within 10 business days of your closing. In many cases, the verifications are done right before or on your signing date. A sudden change could result in a denial because the lender would have to thoroughly re-approve you based on your new job and income.

Don’t overcharge on your credit cards

Most lenders will also check your credit again before the closing. Any new credit could delay your loan, increase your interest rate or result in a denial.

Use the bank account listed on your application before closing

In most cases, your lender will need to verify the source of your down payment and other closing costs. So, the mortgage funder will be looking for a cashier’s check or wire transfer of your closing funds from the bank account(s) you listed on your loan application. Pre-closing is not the time to transfer money out of your account or make large deposits unless you can verify the source.

How to protect yourself from wire fraud

Wire fraud in real estate and rental transactions has become prevalent in the U.S. According to the FBI, over 13,600 individuals fell victim to fraudulent real estate transactions in 2020, resulting in a loss of over $213 million.

Signs of an email real estate wire scam

In most cases, hackers compromise your real estate agent or title company’s email accounts, assume their identity, and send emails with fake instructions for wiring closing funds. If you know  what to look for and follow the tips below, you could save hundreds or thousands of dollars and the heartache of being a victim of real estate wire fraud.

Tip  Action steps 
Verify any email you get instructing you where to wire funds 
  • Before wiring any money, speak to a representative of the title company listed in your contract to confirm the email correspondence.
  • Avoid clicking on email links or replying until you’ve confirmed the contact information verbally using a known number.
  • Call your loan officer, attorney or settlement agent to confirm the wiring instructions.
Never wire closing funds before receiving your closing disclosure 
  • Contact your lender or closing agent at least a week before your scheduled closing to confirm how you’ll receive your closing disclosure. (Legally, you must receive it three business days before closing.)
  • Compare the closing costs listed on your Closing Disclosure to the amounts on the loan estimate. While there may be some differences, discuss them with your lender or closing agent if the discrepancies are significant.
  • If you are uneasy about wiring funds, ask your closing agent if providing a cashier’s check is an option.
Check to see who the beneficiary of the wire is
  • Verify the account name, number and other loan details contained in the wiring instructions.
Only use trusted forms of communication 
  • Never trust a new contact number listed in an email unless you can validate the contact with a known phone number listed on your purchase agreement or contract.
  • Avoid emailing your financial information.
  • Be wary of phone calls you do not initiate. When in doubt, confirm the call with the contact person at your lender or settlement company.
 

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