@Shawn Krieger:
Originally posted by
@Bob Woelfel:
@Anthony Johnson is your client working with a bank or mortgage broker? If yes then I would say that is strange.
Now if they are working with some type of private or hard money lender I would maybe understand the question a little more, but I would then wonder why your client is working with someone they aren't sure has the funds to begin with. Somewhat strange all around.
To give a little more background, we have a private lender that we’re working with. The client has explained to me she has had a bad experience before with other real estate professionals, wherein she paid an upfront fee and received nothing in return.
Since we’ve began our discussions with the lender, the lender has given a reference and the client was able to ask the questions she wanted. Throughout our discussions, the lender has informed us that they do not use an escrow company.
It’s not a small funding amount (several million). The origination fee is 3%, and of the 3%, 1% is due when commitment letter is issued. Before paying the 1%, the client wants to 1) funds will be placed in escrow until closing; or 2) lender produces proof of funds when the commitment letter comes in.
The lender has stated to the client that they do not use escrow companies so option (1) is out, leaving obtaining POF upon issuing the commitment letter. Throughout my time in commercial lending, I've done business with many companies and have worked for several lending firms. They do not use escrow companies, so I didn't see this as a big deal. I did a commercial mortgage worth several million, and no escrow services were used.
