Lender Instructions for Private Party Loan
Member since 2024 · 22 posts · 7 votes
Lender Instructions for Private Party Loan
6 Replies
- 1yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Account Closed:
Sorry if this isn't the right forum...
Title/Escrow is asking us to provide the interest rate or note and lender instructions for current deal. We utilize a private individual for loans. We've done two projects and have never had to provide this to escrow. They will simply draft a deed of trust.
The interest rate or note -- no big deal as we have that. But, not sure why they need it for deed of trust preparation.
Secondly, not sure what to do about lender instructions. Does anyone have a template handy for a private loan? What are the main elements we should include?
Thanks!
I believe a company like GERACI should be able to help you with something like this. Many private lenders use them to help prepare loan docs
LuxePrivate Investments LLC 572 Reviews - 1yScott WolfPro MemberLender · Boca Raton, FL · Member since 2014 · 1k+ posts · 956 votes
Quote from @Account Closed:
Sorry if this isn't the right forum...
Title/Escrow is asking us to provide the interest rate or note and lender instructions for current deal. We utilize a private individual for loans. We've done two projects and have never had to provide this to escrow. They will simply draft a deed of trust.
The interest rate or note -- no big deal as we have that. But, not sure why they need it for deed of trust preparation.
Secondly, not sure what to do about lender instructions. Does anyone have a template handy for a private loan? What are the main elements we should include?
Thanks!
Title may have a standard form they use. I'd ask them first.
- Member since 2024 · 22 posts · 7 votes1y
Quote from @Scott Wolf:
Quote from @Account Closed:
Sorry if this isn't the right forum...
Title/Escrow is asking us to provide the interest rate or note and lender instructions for current deal. We utilize a private individual for loans. We've done two projects and have never had to provide this to escrow. They will simply draft a deed of trust.
The interest rate or note -- no big deal as we have that. But, not sure why they need it for deed of trust preparation.
Secondly, not sure what to do about lender instructions. Does anyone have a template handy for a private loan? What are the main elements we should include?
Thanks!
Title may have a standard form they use. I'd ask them first.
Will do! Same title company from last deal two months ago, so it's a bit surprising they want this now.
- Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes1y
Are you the lender or the borrower in this situation? It's the lender's responsibility to provide the note, the mortgage/DOT, and any other documents that may be required. The lender should be sending over a package containing all of the prepared documents, along with instructions on what needs to be executed, as well as reviewing for effective execution prior to wiring/releasing funds. I would not rely on Title to draft these or to advise on title commitment/title policy as Title typically represents the insurer. I dont know CA's rules and customs, but my experience is that the Title/Closing attorney does not represent the lender's interests. If they botch something, it's the lender's problem to deal with.
Another thing, if the lender doesnt provide written closing instructions, the closing protection letter goes out the window. I believe not having written instructions has some impact on the lender's ability to go after the attorney/title company if get jack up the closing, as well, but I'm not 100% on this. My understanding is that if the closing instructions are followed, then the lender has no recourse against Title/E&O claims for any mishaps that result from Title following the directions. This is not a generic form I'd pull from a random source.
- Member since 2024 · 22 posts · 7 votes1y
Quote from @Patrick Roberts:
Are you the lender or the borrower in this situation? It's the lender's responsibility to provide the note, the mortgage/DOT, and any other documents that may be required. The lender should be sending over a package containing all of the prepared documents, along with instructions on what needs to be executed, as well as reviewing for effective execution prior to wiring/releasing funds. I would not rely on Title to draft these or to advise on title commitment/title policy as Title typically represents the insurer. I dont know CA's rules and customs, but my experience is that the Title/Closing attorney does not represent the lender's interests. If they botch something, it's the lender's problem to deal with.
Another thing, if the lender doesnt provide written closing instructions, the closing protection letter goes out the window. I believe not having written instructions has some impact on the lender's ability to go after the attorney/title company if get jack up the closing, as well, but I'm not 100% on this. My understanding is that if the closing instructions are followed, then the lender has no recourse against Title/E&O claims for any mishaps that result from Title following the directions. This is not a generic form I'd pull from a random source.
Hey Patrick, thanks for your insight! I am the borrower. Why would escrow/title need the note for the purchase? This is a private individual, what are these "required" documents and who is requiring them? Aside from loan position, prepayment of taxes (if any), prepayment of interest (if any), what else should the lender be mindful of?
- Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes1y
Quote from @Account Closed:
Quote from @Patrick Roberts:
Are you the lender or the borrower in this situation? It's the lender's responsibility to provide the note, the mortgage/DOT, and any other documents that may be required. The lender should be sending over a package containing all of the prepared documents, along with instructions on what needs to be executed, as well as reviewing for effective execution prior to wiring/releasing funds. I would not rely on Title to draft these or to advise on title commitment/title policy as Title typically represents the insurer. I dont know CA's rules and customs, but my experience is that the Title/Closing attorney does not represent the lender's interests. If they botch something, it's the lender's problem to deal with.
Another thing, if the lender doesnt provide written closing instructions, the closing protection letter goes out the window. I believe not having written instructions has some impact on the lender's ability to go after the attorney/title company if get jack up the closing, as well, but I'm not 100% on this. My understanding is that if the closing instructions are followed, then the lender has no recourse against Title/E&O claims for any mishaps that result from Title following the directions. This is not a generic form I'd pull from a random source.
Hey Patrick, thanks for your insight! I am the borrower. Why would escrow/title need the note for the purchase? This is a private individual, what are these "required" documents and who is requiring them? Aside from loan position, prepayment of taxes (if any), prepayment of interest (if any), what else should the lender be mindful of?
My guess is that Title is preparing the DOT for the lender and needs the terms from the note. Could also be that they need the terms for the title commitment.
As far as required documents goes, this will vary by lender and the level of sophistication. At a bare minimum, there should be a note, deed of trust, hazard insurance policy with mortgagee clause either paid at closing or verified as paid up and in good standing, lender's title policy.
Most lender's who know what theyre doing are going to require at least the following (just off the top of my head):
- tax certification from Title and/or payment of taxes at closing
- copy of valid identification and affidavit of any AKAs
- affidavit of non-owner occupancy/business purpose use
- borrower auth and certifications to release and verify
- pledge/collateralization of leases/rents
- copy of Title/attorney E&O insurance
- if an entity holds title/is the borrower, then: personal guarantee, articles of org/incorp, certificate of existence/good standing, operating agreement, corporate resolution to authorize borrowing if there is more than one member, possibly a UCC1
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