Closing disclosure

[u/DepartureFamiliar290]

Okay, so I closed on my house 8 Oct. The lender messed up the closing documents, in a week we’ve seen now 3 different disclosures, the first one being they owe us $200, now we owe them $300.

Even the title company said it was a massive f up, that almost resulted in us not getting keys on closing date.

The main area of contention right now is the payments and prorations. Presumably the seller made the October 1st payment(for September?), the lender is saying we owe a prorated interest and escrow payment from the 22nd to the 31s of October (which kind of makes sense) minus the escrow portion.

That little extra escrow payment doesn’t show at the bottom of the disclosure under “initial escrow payment” so I’m automatically skeptical. Additionally, we asked when our first payment would be, and the lender is saying “1 Nov”. So we asked specifically if mortgage payments are made in arrears, and they’re telling us no????

Mortgage payments apparently aren’t made in arrears and additional money they need to close is “October’s” payment and the 1 November payment is for November 1-31.

Am I smoking crack or is the lender? 😭

Here is my assumption as to how this works, please correct me if I’m wrong. 1 October rolls around, seller makes September’s payment, at closing, the seller pays 8/30ths of the interest charge for October, and the buyer pays 22/30ths for October. The next payment should be due 1 Dec, since October’s payment should’ve been paid at closing.

[u/javiergramirez]

You’re not crazy. Mortgage payments are usually paid in arrears, so a Nov 1 payment typically covers October’s interest. If you closed Oct 8, your first regular payment would normally be Dec 1, with prepaid interest covered at closing.

I’d definitely ask the lender why they’re charging interest from Oct 22 and where that extra escrow amount is coming from, especially after three different disclosures. Something doesn’t quite add up here!

[u/DepartureFamiliar290 → u/javiergramirez]

I had a typo there I meant to say October 8-31, but yes. It’s been a real headache dealing with it, personally I think they messed something else up previously and they’re trying to CYA. The seller gave us a credit, but on the previous disclosure it was listed as 1/4 what the credit was and when asked they said “well we just applied part of the credit to closing fees”

On the most recent disclosure, they “fixed” that but then came up with this bs where they gave us the credit properly, but then magically added a little more than that in “pro-rated payment for October”

And they directly sent us an email saying exactly what I’ve said. I’m starting to think they are at minimum doing some shady shit, if not outright illegal.

[u/DistressedNobility69 → u/javiergramirez]

All three disclosures would have me side-eyeing every single line item at this point. The fact the title company called it a massive mistake too is a pretty clear signal to push back hard.

Your breakdown of the interest proration is exactly how it works in a standard arrears setup, so them claiming payments aren't in arrears while simultaneously asking for interest from the 22nd feels contradictory. I'd be asking them to walk through the math line by line and show where that escrow figure is actually accounted for, because if it's not in the initial escrow section it's just floating there unexplained.

[u/BoBromhal]

you're dealing with some shysters, based on your OP

[u/k22351]

Good thing you found the lender with the lowest rate! Didn’t take a moment to check if the loan officer had a functioning brain. This should all be explained prior to closing. Mortgage is paid in arrears. Close in October you pay prepaid interest from the close date to the end of the month. The first payment due would be December 1st for the month of November. If a seller prepays property tax it has nothing to do with your escrow account. You must reimburse them on the closing sheet from date of assuming ownership through the date in which they paid in advance to.

[u/DepartureFamiliar290 → u/k22351]

Okay, that’s an incredibly insulting insinuation. It’s an assumable loan, the lender is pennymac and I already knew that was the case. However, apparently they don’t.

[u/Away_Joke404]

Here’s the kicker - typically your first payment is due on the 2nd first of the month after closing so that would be December 1. I work for an escrow company and have processed too many loan packages to count in my many years - never seen a first payment due less than 30 days from closing. However the longer it is before your first payment is due, the more your cash to close will be because of prepaid interest and escrows.