What is meant by the terms - Wet state or Dry state? In this case, it doesn't have anything to do with alcohol. We are talking about real estate and property loan funding and closings. As Notary Loan Singing Agents, we probably have heard the terms before but never really understood what it meant. Technically, in our role, we really don't need to know what it is because we rarely have to deal with it at the loan signing table. But I am the forever curious nerd and need to know as much as I can about something as it could make my loan signing appointment go smoother at the table. In looking at the loan process, we know that when we meet with the consumer, all the loan and title search process has already taken place and our job is to just collect signatures, sometimes cash to close, and get the documents back to the Attorney or Title/Escrow company. Once those documents are reviewed and accepted (Quality control) the process of closing begins. Funding varies by state and refers to when a mortgage is considered 'Officially" closed, mortgage funds are disbursed and the new owner can take possession of the property. For the buyer, it is literally getting the keys and garage door opener at the table or waiting a few days. For the Seller, it is the difference between getting their proceeds at the table or waiting a few days. What is the difference between a Wet funding and a Dry funding? In 'wet' funding, (sometimes called Table Funding) the lender will fund the loan (transfer money to the Title/Escrow/Attorney) immediately after approval of all the signed documents on the day of the loan signing (shown as closing date on the CD & Settlement Statement). Wet funding wires are typically ordered a day or two in advance and are sitting in the escrow account the day the documents are signed. Commonly the mortgage and title documents are signed, the loan funds are distributed, and ownership is transferred (Recorded) from the seller to the buyer. This scenario is referred to as a 'wet' closing because it is official - before the ink dries. It is much stricter than dry funding and it happens much quicker. The Seller can receive their proceeds on the day the documents are signed and the Buyer can take possession of the property. This is 100% done on closing day. For a 'dry' funding, on the closing date, all parties sign the mortgage documents, the lender requirements are met...but the funds are not immediately disbursed. The funding package needs to go back to the lender so that it can be reviewed. No funds are distributed to the Seller on that date and the Buyer cannot take possession of the property quite yet. It takes a few days before the lender funds the loan (wires the money to Title/Escrow/Attorney) and the conveyance document is recorded transferring ownership to the new buyer. By this time the - ink will have dried. Dry funding slows things down and is intended as a consumer protection to ensure there aren't any added issues that need to be addressed before funds are distributed. I know I've certainly been at the table on a Seller package and I'm giving the signer my "Exit" speech and the question comes "But where is my check? Didn't you bring my money?" I immediately correlated that this Seller's past experience has been with property located in a "wet funding" state. Dry funding rules vary from state to state. Which states are 'Wet' or 'Dry' Funding states? Dry Funding States AlaskaHawaiiNew MexicoArizonaIdahoOregonCaliforniaNevadaWashington Wet Funding States AlabamaIndianaMinnesotaNorth DakotaVermontArkansasIowaMississippiOhioVirginiaColoradoKansasMissouriOklahomaWest VirginiaConnecticutKentuckyMontanaPennsylvaniaWisconsinDelawareLouisianaNebraskaRhode IslandWyomingDCMaineNew HampshireSouth CarolinaFloridaMarylandNew JerseyTennesseeGeorgiaMassachusettsNew YorkTexasIllinoisMichiganNorth CarolinaUtah Whether a particular state is 'wet' or 'dry' is strictly based upon that state's RE laws. But surprisingly there are two states that allow for both; California and Alaska. For Real Estate Agents, a wet closing is preferred and will allow them to get their commission a little faster. A lender may prefer a Dry Closing if they are having issues with funding, technology issues, a backlog of applications, or a misplaced form or even waiting on specific repairs to be made to the property. Dry closing would give them a little more time to resolve those issues. For the Buyer, a 'dry closing' just means it will be a few more days until they can post that key-dangling, big-grin selfie on Facebook.
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