Refinancing joint mortgage for equity buyout. How close to the end do you think we are?

In My Humble Opinion
1

Due to a divorce my ex wife is refinancing the house we have under a joint mortgage in order to buy out my equity in it. The new loan is hers alone so I am unable to look in on the details. I just sign the occasional thing they send over to me.

I’ve just been asked to go to the title company’s office to sign a quitclaim deed.

I also know the appraisal has been completed. And I’ve signed a thing stating that this is a refinance for an equity buyout and I’m the recipient of the buyout.

I don’t have any other hard information, just second impressions from the ex saying things like “things are looking good.” At one point she said she believed it was as good as approved but later on she seemed to hedge saying just that things seem to be going well.

I also have the text of an email she got from her loan officer where the loan officer says they are “working on the loan closing.” (This was the email where she said to Jessica that I need to sign the quitclaim deed.)

Based on all this information, do you think it’s likely that the thing is nearing an end and has probably been basically approved, or its nearing an end and we have no idea about approval yet, or we have no idea whether it’s nearing an end?

2

260 views and no replies. But just in case you still need an answer:

Call the loan officer and ask.

3

BTW, why would you sign the quitclaim before the closing?

4

He’s not the borrower, so they may not speak with him.

Former title company guy here. The title company schedules the closing, but they can’t do so until they have everything they need to insure that the new mortgage has a lien priority on the house. Even once they’ve done that (usually by obtaining payoffs on any pre-existing liens, or applicable affidavits), they are then at the mercy of the bank who is producing the new loan to send them loan paperwork to be signed.

So, there’s essentially two (probably overlapping) processes going on. One involves the title company collecting documents to insure the loan (which includes the Quit Claim Deed they had you sign) and the other is the bank collecting documents to get the loan approved (which relate to your ex, the borrower).

It sounds like you are at the point where the title company is done and just waiting for the bank. There’s nothing you can do other than encourage your ex to be responsive to their requests for information - usually, at this late stage, they are tracking down some random data to clear a last condition (maybe, for example, a letter explaining some expenditure, or a bank statement to show some source of funds).

It is possible that there’s some hiccup (she didn’t go out to try to buy a new car in the last few weeks, or some other major purchase, did she?! That might ruin debt to income ratios), but it is very common for these types of picayune things (demanded by a picky underwriter) arise; the bigger issues (like whether she has the credit to secure the interest rate or the income to pay the mortgage amount) have already been resolved.

One of the roles of the title company is to record the documents that are part of the loan in the public records; this is part of the process of insuring the validity of the loan. In this case, those records include a quit claim deed (basically, she is taking out the loan, so first they are requiring her to take title to the property in her sole name by having him disclaim his interests), which will be recorded along with the mortgage.

So, in anticipation of closing, the title company has already asked for, and obtained, a signed copy of that deed, which they are holding ‘in trust’ pending the ability to record the mortgage at closing. This is a convenience thing, especially since the OP has no reason to physically attend a closing where his ex, and not him, is going to be signing the loan docs. But, the title company won’t give him his loan proceeds without that document, since they require it to complete their process. It’s easier to just send it to them ahead of time for safe keeping, which is why they ask.

5

Thanks for the explanation.

6

Does the divorce settlement say how much she is supposed to pay you for your share of the house?

When I got divorced, I got our house and had to pay my ex a set sum of money. And in return, she would sign a quitclaim deed on her share. This was spelled out specifically in the divorce settlement. I never bothered with it until I wanted to refinance the house. Then, she had to sign the quitclaim deed BEFORE I could close.

So, in your situation, if the amount she has to pay you is stipulated in the divorce settlement, then just go and sign the quitclaim and then wait for your money.

7

Another thought that might give insight into when the closing will happen.

Mortgage payments are due on the first of the month, and late on the 15th.

Mortgages (I’m talking about conventional mortgages from institutional lenders) are also paid in arrears, meaning that when you make a mortgage payment you are paying the principal and interest on the month just completed.

To accomplish this payment scheduling, at the closing the borrower will pay pre-paid interest from the day of closing until the last day of the current month, with their first mortgage payment then due on the first day after the following month has passed.

This need to pay prepaid interest at closing creates an incentive to close as close as possible to the end of the month, thereby reducing this prepaid interest cost (e.g. If the closing is March 15th, at closing the borrower would have to pay interest from that closing date until the end of the month of March, with the first mortgage payment due May 1st and consisting of the principal and interest for April. The same is true if you close March 31st, except now you only need to pay 1 day of interest at closing before you start to accumulate April’s P&I.)

I hope this makes sense…practically speaking it means that closings are often set as close to the end of the month as possible. Of course, you are up against other closings in that office, but the last week of the month is a very busy time.

Also, at least when I was doing this (more than a decade ago) the law provided for a 3 day right to rescind any refinance on a primary residence. This meant that, after the loan docs were signed, the loan would not get funded until three business days later. This, of course, might impact the disbursement to the OP.

(In this day and age, I imagine the money will be sent by wire to OP’s account, meaning it should be available once it hits his account).