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Attorney Closings
by Robert Franco | 2007/03/14 |

Apparently the attorneys in North Carolina are proposing legislation that would prohibit anyone except attorneys and lenders from closing loans in the state. I guess it is really no surprise that the National Notary Association is opposing the move. They claim that Georgia, an attorney-only state, has one of the highest rates of mortgage fraud in the country. And, attorney-only closings will only create a monopoly that will cost consumers more.


"North Carolina lawyers are proposing the type of monopoly that has driven up costs time and time again," Reiniger said. "Eliminating competition is a terrible move that will make lawyers more money at homeowners' expense."

But, I referred to a case in previous post, A Simple Transaction, that pointed out that even in home equity lines of credit, an attorney's representation can prevent problems for the homeowner.

Here is an excerpt from Boniour v. Citibank, N.A., 2006 N.Y. Slip Op 26525 (N.Y. Misc. 2006):


Apparently someone has taken the advice of Dick the Butcher in Shakespeare's Henry VI, Part II and "kill(ed) all the lawyers." Nowhere in this transaction does there appear to be the participation of any lawyers... At one time a real estate transaction consisted of a deed, a note and a mortgage; took about fifteen minutes to complete; and had the participation of an attorney for all parties to the transaction. The last time the Court checked, we were still in the City of New York where people do not even verify the score of the Yankee game without consulting counsel, and yet, lawyers have effectively been eliminated from real estate closings involving the refinance of mortgages and secondary loans, including home equity lines of credit. One could conclude therefore that these transactions have no legal implications. That, however, would be far from the truth. The borrowing of money secured by a mortgage is often a complex transaction with serious legal implications for all of the parties involved, especially the borrowers who are pledging their home as security.

It is a great case. The judge's opinion was very well written and he made a great point - even the simple transactions have very complex legal implications. Homeowners can't be expected to understand all of the aspects of the closing and they are often surprised by the terms they have agreed to.

Obviously, given a choice, most consumers are going to elect to proceed with a less expensive notary closing their loan than an attorney. Heck! Given the choice, most wouldn't purchase title insurance either. They have been led to believe that the paperwork is all standard and signing it is just a formality to get the loan. They place too much trust in their Realtors or loan officers.

Yes, even in an attorney state, mortgage fraud can occur. Even an attorney would not be able to detect some of the criminal activity that goes on behind the scenes. However, there are many instances where a homeowner would definitely be best served by an attorney's representation.

In an article in the Pocono Record, Home buyers testify against Peterson, I was shocked to learn that the settlement agent was accused of falsifying documents that resulted in a second mortgage that the homeowner was unaware of.


Yvette Owens of Blakeslee, who bought her home in 2001, testified she was saddled with an undisclosed second mortgage — to help cover the down payment to the primary lender.

Owens said she didn't learn about the second mortgage until after 9/11, when she quit her New York job after witnessing the trauma of the twin towers' collapse. Owens said she asked the Pennsylvania Housing Finance Agency for temporary mortgage assistance, and the agency told her it couldn't help since she had two mortgages on the house.

"I said I didn't have a clue of it," Owens said.

Owens contends she never signed for the second mortgage, but did sign a paper on which the mortgage information — including the title "second mortgage" — was filled in later.

"I signed a piece of paper that never said anything about a second mortgage," she testified. "It was just a piece of paper."

I'm sure most people think that they would never sign anything that wasn't filled in. However, in the flurry of paperwork that gets pushed across the table, I could see some innocuous looking document getting shuffled in that could be changed after the closing. All the notary has to do is say "please sign here." After signing 30 other documents, borrowers tend to stop asking questions and do as they are instructed.

I do agree, completely, that every real estate transaction is more complex than borrower's are led to believe. They need better representation. An attorney is held to a much higher standard than a notary and the consequences are much more drastic for an attorney who shirks his responsibilities. After all, a notary has much less invested in becoming a notary public than an attorney has in obtaining his license to practice law.

When you look at the cost of requiring attorney-only closings, you can't just look at the front-end fees. You also have to consider the costs to consumers that are poorly represented when they have to fix the mess after the fact.

I don't mean to say that there aren't good notaries out there doing a great job. But even the best of them are not capable of providing the same level of representation that an attorney can provide. A notary can only notarize... they can't advise... and borrowers need more of the latter, whether they realize it or not.

Robert A. Franco

Source of Title Blog ::


Categories: Attorneys, North Carolina Legislation, Notaries Public

1374 words | 6504 views | 13 comments | log in or register to post a comment

Kudos to the NC bar for pursuing th...
Kudos to the NC bar for pursuing the matter.  
by Diane Cipa | 2007/03/15 | log in or register to post a reply

In over 5 years of doing witness-on...
In over 5 years of doing witness-only closings or notary only closings, I have seen very, very few non-standard packages. Most of the lenders involved in the refinance business use a collection of documents from a small number of vendors and these have been vetted by so many attorneys that it makes no sense to pay for another one to look them over. With the 3 day right to cancel, consumers have the chance to take their package of documents to an attorney for a legal review and I point that out to them at the front end of the closing and at least once more during the signing. The effect of this legislation IS to take away consumer choice and convenience (an attorney is not going to go to the home or work place of the consumer in most cases) and to cost the consumer more in the process. The only problem with the refi business is bad lenders and brokers, who sell the consumer on bad loans, and any legislation should focus on that problem -- not take away consumer choice.  
by Tim Gatewood | 2007/03/19 | log in or register to post a reply

I've worked as a RE Paralegal in NC...
I've worked as a RE Paralegal in NC for many years, and as an EO in CA for 10 years. Attorneys in NC don't do any of the work, the paralegal does, the attorney shows up at the closing, never having seen the file or the title search and closes the loan. The attorney gets the nice paycheck, and pays the staff that does the work nothing. I've seen far more closing nightmares in NC in my first year here, than in the entire 10 years in CA. Lazy attorneys that don't have the title search done until the day before closing, and the results stop the closing. The thing I loved about CA title companies, is the search was done when the order was opened, there were very few surprises.

This introduction of legislation has come about because the attorneys that practice nothing but RE Law have lost 99% of the refinance market to out of state title companies and settlement companies. They don't know how to practice law, and don't want to move into an area of the law where they'll acutally have to do some of the work.

The funniest part of it all, is most of these NC attorneys don't even know basic notary law, and don't follow state required notary guidelines. Many require staff members that didn't even witness the signing to notarize the docs.
by | 2007/03/19 | log in or register to post a reply

I don't know WHERE in North Carolin...
I don't know WHERE in North Carolina "nclisa" claims to have worked or for whom she claimed to have worked, but as an attorney with over 30 years of RE closing experience in NC, her comments are not factual regarding the majority of NC attorneys practicing RE law. Her comments sound more like a bad case of "sour grapes" with one particular firm than an objective report on the entire real estate Bar in NC.

I do my own title searches, and I know plenty of other attorneys who do so as well.

The idea that attorneys have lost 99 % of the closing business is as bogus as most of her other statements.

Also, NC attorneys who require staff to notarize documents that they haven't seen signed by or acknowledged by the
principal can and HAVE lost their license to practice law. I personally know two who have been so disciplined.

The introduction of the legislation is coming about because the so-called "closing shops" that have been springing up in NC are routinely getting nailed for UPL violations AND getting shut down for defalcations of escrow funds and remittances to their title underwriters.

Are there "bad apples" among NC closing attorneys? Sure. But it turns out the title underwriter sponsored closing shops are worse than the worst of the closing attorneys, and there is no effective regulation of such shops.

by lford | 2007/03/19 | log in or register to post a reply

I witnessed an attorney only closin...
I witnessed an attorney only closing in Tennessee, where my relatives were concerned, and the lawyer didn't explain a damn thing to them. He read the header of the document, slid the paperwork to them, and pointed to where they were to sign. That was it. My parents were charged a $300 fee by this attorney. 
by Linda Cunningham | 2007/03/19 | log in or register to post a reply

Sure, most closing packages are "st...
Sure, most closing packages are "standard" to you and me--we see them everyday. But how standard can they be for someone who is involved in a real estate transaction every three or four years? Nearly every document in a closing package is a contract of some sort. If a consumer is unable to decipher those documents, they should have someone explain to them what they are giving up, and what they are obligated to do--that is, the legal effect of the documents the are signing. 
by Thomas O. Moens, Attorney at Law | 2007/03/19 | log in or register to post a reply

I'm a realtor in Georgia my wife is...
I'm a realtor in Georgia my wife is a closing Att. in Georgia and my mother-in-law is a broker in NC. This conversation is right up my alley. I can tell you that a good Attorney will explain the important points of the documents that are presented to buyers during a real estate transaction. Most of which are state laws and loan terms. What many people don't realize is that the Attorney represents the lender and not the buyer or seller in most closings. Mortgage fraud is a problem here in Georgia, but Attorneys cant stop it, but they do what they can. My wifes office has participated in sting operations with the GBI to bust big time violaters, but in most cases the Att. office does not even know about these stings until the last min. If you are that concerned about the documents you are sigining you should retain the services of your own personal Attorney to review documents and help you define legal stipulations in a purchase and sale contract particulary with new home construction and arbitration. As far as your loan is concerned educate yourself and seek advice from your realtor. Realtors like to work with lenders they know because they perform well and make things run smooth for everyone. They are also more familiar with the fees they charge and can protect their client from getting blistered with junk fees. Realtors can't recieve a kickback or compensation from a lender we just want the deal to close smoothly! And remember your realtor is not an Attorney! As far as Attorneys go every one of them at my wife's firm clears their own titles, but the do get help from their closers/parallegals, but the final responsibility lies on the Attorney and the $450 people pay for Att. fees is a bargin in my book. You don't realize the work that goes into it and how many deals Attorneys save and get closed on time. Many of the problems Attorneys make go away and resolve just so you can close on your property without incident are usually not even the Attorney's responsibility. All I can say is that it starts with a good realtor. A good realtor has a good network of people behind them to make sure their client is taken care of. I make sure I know the best lenders, home inspectors, Attorneys, termite companies, handy men, etc. Start there and everything else will fall into place. 
by DudleyDoRight | 2007/03/20 | log in or register to post a reply

The first time we signed up with NA...
The first time we signed up with NAA, (National Notary Association) and became a certified signing agent, we were under the impression that NOTARY CLOSINGS were legal. Apparently, as time went by we were in acknowlegment that Delaware is an "attorney state," and have taken ALL the notary work from us and we are without jobs. We contacted the Secretary of State in Delaware, regarding our notary Commission and they didn't have enough say into the matter. Again, we contacted The Bank Commissioner regarding this matter as well. Although there was mention of a law suit with Mid Atlantic Settlement which changed everything! We have been mobile notary's for more than 8 years and still the Delaware law persists. We should focus both on the problem and come up with a solution to better our notaries public. Delaware legislation IS taking awaying our choice as a Notary Public. Inasmuch as MOST attorneys in this state are NOTARY PUBLICS. Again, there goes our chances of ever witness signing loan closings all because of a mistake Mid Atlantic made several years ago. For example, we contacted our attorney to do a closing for our refi and he didn't even explain anything in the loan docs (although I knew them inside out) Eventually, we had to pay 350.00 whereas a mobile notary service charges 75.00 - 100.00 for the same service. I don't call that FAIR, I call that corrupt! 
by TJC MANAGEMENT SOLUTIONS 1999LLC | 2007/03/20 | log in or register to post a reply

I'm a real estate paralegal. I've ...
I'm a real estate paralegal. I've worked for several real estate attorneys in the Triangle over the last 20 years. This legislation is all about money, and the real estate attorneys losing the refinance market in this state! The only refinance business left in our office is a couple local brokers, on loan officer from a credit union and purchases. We've lost 90% of the refinance market to out of state TC's. And we should! Notary closings are more convenient for the borrower, it happens in their home or their office at a time they want. They have 3 days to review the documents, and if they need an attorney to review them, then they can do it then. That is the only way an attorney would actually represent the borrower.

The attorney represents the lender at the closing table not the borrower. In all my years, I've never heard an attorney admit that to a borrower. If a borrower doesn't want to sign a documnent in the closing package, they don't get the loan, that is it. A notary, a loan officer, a bagger at the grocery store can tell a borrower what a document says without rendering legal advice. And most other states realize this.

As another person on this thread said, most attorneys don't even know basic notary law. There is one attorney in our office that makes his paralegal notarize all the loan documents, and that paralegal was not in the room. He also doesn't check ID, he says he's an attorney, and that his word is good enough to notarize by. This happens ALL the time! And yes, it has happened at several firms I've worked at. Attorneys in this state, aren't required to take the basic notary class so they many of them just make it up as they go along. I've actually reported several instances to the BAR and SOS in this state, the attorney hasn't even recieved a slap on the wrist!
by | 2007/03/28 | log in or register to post a reply

I would like to know how a buyer in...
I would like to know how a buyer in California can purchase a property in Georgia and not have to personally sign the paperwork in Georgia. Can the Loan docs be mailed to the buyer and be signed in front of a California Notary then sent back to Georgia to be processed and recorded? 
by Joe Ewing | 2007/04/16 | log in or register to post a reply

Yes. That should not be a problem....
Yes. That should not be a problem. So long as the documents are legally executed according to the laws of California or Georgia, they will be fine. 
by Robert Franco | 2007/04/16 | log in or register to post a reply

This conversation has gone on for m...
This conversation has gone on for many years now. I have been a witness-only closer, courtesy closer, whatever title you pick since 1996. I have closed small business loans, purchase money loans, refinances, HELOCs etc.

I have written training on this topic. As long as the closer (attorney or non-attorney) provides full disclosure while going through the loan package along with the 3 day right to cancel on refinance (that is not an investment property) the responsibility falls back on the borrower to ask questions, have an attorney OF THEIR CHOICE review the package as well as the broker/loan officer to present the product correctly.

Now I can agree that we have too many "bird dog" folks "Just Sign Here" in the business and this is where the problems come into the picture. This includes attorneys and non-attorneys.

I have owned three different properties in NC and I can tell you that the attorneys did not explain anything with any of the three purchases, even in the time of bubble bust back in the 80s when we were seeing double digit interest rates. Try a 15% loan on for size and that was a good rate.

I have had loans that have cancelled at the table because I do my job, I do it well, and I don't hide anything to accommodate the broker/loan officer that glossed over things and did not tell the borrower exactly what they were getting.

There are some GREAT brokers/loan officers out there that do a wonderful job and their loans close without any problem. BUT there are some bottom of the barrel type brokers/loan officers that out and out lie to the borrower or hedge the truth or just plain leave things out because they know the borrower would walk away if they told them the truth.

I have closed for circuit judges, lawyers, bank VIPs, real estate people, brokers, etc in my time and have always been complimented on how thorough I am without going over the line. It isn't always about the money but how well the service is performed. Too many are teaching bird dog tactics rather than teaching the art. It isn't rocket science, it is detail, it is not having an opinion, it is being unbiased and presenting exactly what is on the paper. Nothing more, Nothing less. If the borrower has the facts, then it is their decision to sign or not sign.
by vanton57 | 2007/05/21 | log in or register to post a reply

now they are putting no stated loan...
now they are putting no stated loans starting january! 
by North Carolina Mortgage | 2007/10/23 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco



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