These terminologies have nothing to do at all with alcoholic drinks but everything to do with the real estate business. It pertains to the time in which a new buyer can take over a new property after the loan is regarded as closed.
“Wet payment laws” demand that lending banks pay out funds during a particular period of time as soon as the closing date of the loan, which may vary according to the specific state where the mortgage was taken out. Disbursement times may differ depending on the state where the mortgage took place and can range from the date of closing to within two days afterwards. Intentionally made-up to shield the consumer versus bank fraud, these laws prevent lending banks to postpone funds dispersal as soon as the required papers have been signed.
“Wet funding” and “dry funding” are two slang expressions that refer to the state of origin as far as the funding is concerned. Dry funding means that required paperwork required to officially close a loan does not have to be concluded on the date of closing and states that allow this are known as “dry” states. Wet funding is stricter and requires that all the required documents needed to close the loan must be ready and approved at the time of closure.
Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington are regarded as dry funding states and all the others are as wet as they come. A dry closing happens for the benefit and convenience of both the buyer and the seller and is actually not a closing at all. No money is distributed and the parties convene only to sign documents.
Dry funding assures the legality of the sale and deters counterfeit activities. Money is dispensed very quickly and the transaction is quite rapid, escalating the risk related with a wet loan. With the sale happening before the paperwork is concluded the convenience and speed must be thought of against the clear possibility of real estate fraud. The bank receives the loan documentation for evaluation as soon as the funds are transferred in the case of a wet loan, which in a way is like putting the cart before the horse.
You can understand the difference between wet and dry funding by doing research on these matters. Approaching house loans with caution is always the best protection from bank fraud.
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