VA Loan | Wholesaler Using Flash Cash | Closing Disclosure Issue

[Joel Harriger]

Hi All, this is my first post.

I am about to purchase a house from a wholesaler who will be using flash cash and wants to do double closing hours apart. Where we are hitting a snag is I am using a VA loan and my lender needs to send out closing disclosures 3 days prior to closing and since the ownership is not under the wholesaler's name, they won't be accurate and the lender won't put the wholesalers name in the documents until they have proof of ownership from him.

His flash cash lender said they would do 7 days prior but want to charge and additional 3 points and he is asking to split it with me. I'm getting a good deal and still making out well even with that option but obviously that's not ideal. Can anyone tell me if you've come across this situation before and how was it handled? Or have any other suggestions? Thank you!

[Chris Mason]

Hi @Joel Harriger,

I could be totally wrong, and in this case for your sake I hope I am. But...

• Preliminary title report needs to be updated to reflect current owner of public record. Title company needs to NOT list any exceptions to lender's title insurance coverage related to what the wholesaler is doing. One business day. 
• Appraisal needs to be updated to reflect current owner of public record. Getting an appraiser to change 2 words on an appraisal, especially with a VA appraiser, can easily be 3-5 business days or more. Sometimes I can look at the name on the appraisal and know it's one of our dudes that gets things in same-day, but I wouldn't bet on that for VA.
• Closing Disclosure needs to be issued / re-issued. Some places can process the order same-day, other places take a business day or two.
• Underwriter needs to review all of the above, issue clear to close, and allow docs to be sent to title. I hope this isn't a 1-800 number outfit doing the VA loan, or that's another 5 days in the underwriting queue easily right there.

7 days is certainly pushing it. 

Technically that 3 points you are splitting, outside of escrow, is against the rules. If the underwriter catches wind of it, it could jam you up.

The GOOD NEWS for you is that it's the wholesaler that's going to be stuck in this financing that charges 3 points per week (APR = about 156% plus the note rate), not you.

@Shari Peterson is a transactional lender that actually knows what she is doing with this stuff. I have no idea if she does business in your state, but for the sake of your wholesaler you may want to have them give her a jingle to ask. Wholesaler lurkers, if you need transactional financing because your end-buyer is getting Agency financing, a good transactional lender will let you know how it will play out up-front, and not give you a 156% APR "surprise!" at the last minute like these Flash Cash folks apparently did to OP's wholesaler.