Wednesday, August 29, 2007

Objectivity and mortgage counseling in real estate...

The whole subprime mess has gotten me to thinking:

A. Should I (and real estate lawyers in general) be more actively involved in lets call it "mortgage counseling" during residential real estate transactions?

In a typical residential real estate transaction I'd say I'm somewhat "hands off" regarding the mortgage process. We'll actively be involved in timing stuff like a buyer's lender getting an unconditional approval to close. And at the closing we'll look through the mortgage and note closely. Once in a while we'll hold lenders' feet-to-the-fire a bit on their "processing" fees too. But the fact of the matter is by the time you're at the closing table it's usually too late to do much other than knock off a few fees. I think at a minimum during our initial client contract review I'm going to start asking about mortgage terms/rates. Perhaps always ask for the initial lender Good Faith Estimate too.

B. Should lawyers ever be involved in mortgage/funding origination?

I don't think so. I used to work at a firm where some of the lawyers were loan originators with Capital Funding that is part of Attorneys Title Guaranty Fund. But doesn't this begin to diminish your objectivity? I don't know I just see sooo many people in the real estate transactions whose motives are not 100% to the client/customer. Isn't there a certain honor in just being committed to your client and to flat-out objectivity??

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