Credits to Buyer Must Be Communicated To The Lender.

If you are obtaining a loan, your lender will need to be aware of any credits you are to receive through the escrow. Most lenders have certain thresholds when it comes to credits received by buyers towards the purchase price and closing costs. In the event that the buyer and seller negotiate a credit after the original agreement and/or escrow instructions are prepared and executed, the escrow officer will need to be informed of this information via an addendum to the contract so that he or she may prepare an amendment to the escrow instructions and provide a copy to the lender for approval. Remember the escrow officer oversees the whole transaction and often acts as a safety net. In the event that credits are not communicated to the lender in advance for approval by the appropriate parties, the escrow officer will usually make the timely disclosure via email to inform the lender of a forthcoming credit addendum to the contract if he or she is made aware of the credit. Moreover, problems arise in escrow when the parties do not inform the escrow officer about such arrangements and, in turn, this pertinent information does not get relayed to the lender for proper approval. In these cases, the approval of credits or lack thereof may cause escrow delays or possible cancellation. If the buyer is unable to close without the promised credit, and the lender will not allow it, there may not be any more options for the buyer to choose from, especially if this information is learned too late in the process. In order to play an active role in avoiding situations like these, please remember to keep your escrow officer informed at all times.