We completed the closing process with wet signatures on the 3rd of January, initially having a $440 credit for cash to close. Before the notary arrived that day, I was instructed to e-sign some documents and wet sign the rest. However, on the 7th of January, the lender informed me that we mistakenly signed certain documents that should not have been wet signed, requiring us to re-sign everything. This time, the notary brought documents showing we now owe $182 due to adjustments in the property/utility taxes and insurance contributions for escrow, which increased from 3 to 5 months. This sudden change and the need to sign again make me feel we are being taken advantage of. Can anyone offer advice or insight on this situation?
Which state is this in? If it’s a dry fund state, changes like this are permitted. Also, changes in escrow are usually to cover third-party expenses, not something the lender profits from. Adjusting this now prevents future escrow shortages you would have to cover anyway.
@Emory
The property is in Virginia.
Fintan said:
@Emory
The property is in Virginia.
Virginia operates with wet funding, where this shouldn’t normally happen. However, adjusting the escrows is not typically a major issue unless it significantly alters your financial obligations. It’s likely done to prevent a future escrow shortage, which would be your responsibility.
@Emory
I appreciate the clarification. But if everything was signed already, why do we need to sign again?
Fintan said:
@Emory
I appreciate the clarification. But if everything was signed already, why do we need to sign again?
The initial escrow calculation was incorrect, predicting that your taxes would be due two months earlier than expected. Without resigning, you wouldn’t have sufficient funds in escrow to cover the property taxes on their due date, potentially leading to additional costs for you.
It’s easy to assume the worst, but this sounds like a genuine correction of an initial error in calculating escrows. Such corrections are common, and it’s likely that all documents need to be re-signed to ensure they carry the same date for consistency. It’s a standard procedure, and verifying that the loan terms have not changed elsewhere in your documentation is a good step.
This doesn’t necessarily mean you are being taken advantage of. It seems like an honest mistake in calculating the initial escrow payment was made. Not correcting this now could result in a higher payment next year to cover the shortfall. It’s also likely you agreed to correct any documents post-closing if errors were found.