Can someone help clarify the Good Funds law? How does it apply for O/O refi's? Are the lenders required to send the funds out to sit for 3 days through the rescission period?

Thanks!

Can you provide a cite?

Are you talking about lawyers and escrow accounts?

It's the Georgia Code # 44-14-13. I'm more interested in the Lender's responsibility to deliver the funds at signing. I know that the attorney cannot finalize the transaction unless "good funds" are there, but I need clarification that the funds need to be there when the clients close (sign docs), so in an O/O refi, the funds will sit there for 3 days while the borrowers observe their rescission period?

" This Code section applies only to transactions involving purchase money loans made by a lender, or loans made to refinance, directly or indirectly, a purchase money loan made by another lender, which loans will be secured by deeds to secure debt or mortgages on real estate containing not more than four residential dwelling units, whether or not such deeds to secure debt or mortgages have a first-priority status."

I don't know what an O/O refi is - never heard that term. However this section only applies to purchase money so rescission wouldn't be involved.

O/O = Owner Occupied

Umm.. "or loans made to refinance"?

In addition to Purchase Money loans, it also applies to: "loans made to refinance, directly or indirectly, a purchase money loan made by another lender", which pretty much covers all loans since most loans are refi's of purchase money loans.

That part would require rescission..yes. However, many refi's occur that have nothing to do with refi of original purchase $ from another lender.

Back to the regulation...whether you hold it during the rescission period or whether the attorney holds it is a matter of internal procedure. The funds are not technically "good" until after the 3 days anyway. When dealing with a closing attorney, it's often easier to deliver all documents and funds with instructions for the attorney to hold the funds until the required period has passed...otherwise, it is equally acceptable to hold the funds in the bank and deliver when the funds are available to rightfully disburse.