Have to vent on my refi closing today

[Mike H.]

Ok. I have to vent a little on this closing I just wrapped up today.

I want to see if I'm way off base here and just let frustration get the better of me or if this title company was just trying to do the right thing but with a some poor interpretation of the rules.

So here was the scenario today at the closing. It was a single family home rental property that I was refinancing out of a rehab/hard money loan and into a commercial (portfolio) loan with a local bank.

I've done about 15 of these with local banks before and never had an issue. Although I've never closed at a title company on these either. Usually its just right at the bank.

But here's what happened. As the title rep is asking me questions, she hits on one "have you had any work done in the past 6 months". I answer yes. "Did you do the work?" I answer no. Licensed contractor.

"Do you have a waiver." I answer, Yes. I actually did get a final waiver. I told them I could send it to them when I get home. My lender, who was at the table as well says, yea, he just missed that and its not an issue. Lets send it over when I get back and they'll close once its received.

And here's where the fun starts. The title co rep then asks how materials were accounted for in the waiver. Was the waiver for labor only or material and labor. I have no idea. It was 2 months ago and I don't really know how we did the waiver. Just know that he filled it out and signed it because the rehab lender needed it for the rehab escrow reimbursement.

She then says that if material is included in the waiver that the waiver needs to say that the material was from paid stock OR I would need the receipts from the contractor. I've never seen anything like that before but ok. If I need a new waiver done with that, I'll do it.

I then get home and send over a copy of the existing final waiver. The rehab lender is very meticulous in their paperwork (trust me), and they had a really strong clause in there about material. I asked if it was sufficient and, if not, if I should have a new one done saying that all materials used by the contractor were from paid stock.

The title rep then tells me that even if it says that, it won't be sufficient. They need all the receipts for the materials. Then I proceed to rip the title rep a new one. I ask how that makes any sense at all. The contractor is certifying that all materials were from paid stock. That a receipt for drywall from lowes doesn't prove that the receipt for that specific amount of drywall actually went to my house so what value could it possibly serve?

And that there is no way lowes can put a lien on my house if a contractor buys a faucet fixture or drywall or screws and doesn't pay their store card off (the store cards are credit cards after all and credit card companies would have no claim against my home).

The logic of it just made zero sense to me. And the fact that it was completely different from what they told me at the closing only infuriated me more.

Finally, after the title rep could tell how mad I was getting, said she would run the original lien waiver by the corporate office and would ask them about the second waiver I said I was getting explicitly stating that "all materials were from paid stock".

15 minutes later, she got back to me and said the original waiver was actually ok as it was! Come on! Why didn't she check with them in the first place? Had I not been such a whiner, I would have had to go back to my contractor and track down every receipt my stuff - roughly 2 or 3 months after the fact.

So, was I way off dumping on this title company rep? Or did they have it coming to them given they were making up some crazy requirement about receipts that they actually didn't even need in the first place?

Feel free to tell me I'm a dummy and that they had a small leg to stand on. But, me personally, I am a little tired of some of these uneducated real estate services using the excuse, "we have to be much more diligent these days about everything" or "its not like it used to be during boom", to justify them not knowing the actual rules of their own service........

I still remember a closing I had about 3 years ago where the underwriter wouldn't approve the loan until I showed that I deposit the tenant's security deposit in my bank. I argued with them that the tenants paid the security deposit in cash and here was a copy of the receipt.

I then showed them my bank statement where cash was deposited. They took it. I have no clue whether that was the actual deposit or not. How do you prove cash?

And, really, what purpose did it serve to show that I deposited the security deposit in the first place? Did that somehow lessen the risk of my repaying the loan? They could see I easily had more than enough money in reserves to cover all my security deposits.

That was just another case of a real estate services employee not knowing the rules and making their own up along the way. The only reason I didn't raise the issue back then like I did today was because there was absolutely NO lending back then so I had to get that loan. Today, there seems to be a lot more available. So I feel a little more empowered to push back a little on the nonsense. :-)

My lender, who was cc'd on my emails, wrapped it up nicely. "The important part is that its resolved".

True. But sometimes its nice when you can stick it to some of these service companies. And the real moral of this story is:

When it comes to real estate, NOTHING is ever EASY!