Bank Says I have to use their Attorney???

gaonmymindJune 5, 2012

So the bank has a few attorneys that they use for closing. Although I am paying for the representation they want me to use one particular attorney. They are being very adamant. Well my loan officer is.

Does this sound right to you? It is Suntrust.

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No. An attorney is supposed to protect YOUR interests. It sounds like the loan officer's interest to me. You need to be very adamant. I think it may be illegal for them to require a particular attorney, but I'm speaking off the cuff.

    Bookmark   June 5, 2012 at 11:02PM
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    Bookmark   June 6, 2012 at 7:56AM
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Often you have to pay for their attorney as well is that what it is? If they are pushing you to use their attorney to represent you tell them to take a hike. You should already have an attorney of your own lined up.

    Bookmark   June 6, 2012 at 11:34AM
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Ours "encouraged" us to use the one they wanted us to use as well. There's a reason they do that and it's not right. You can use your own closing attorney. We did and everything went very smoothly.

    Bookmark   June 6, 2012 at 2:44PM
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Ours "encouraged" us to use the one they wanted us to use as well. There's a reason they do that and it's not right. You can use your own closing attorney. We did and everything went very smoothly.

    Bookmark   June 6, 2012 at 2:57PM
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The attorney who oversees a closing does not represent any of the parties. (In many jurisdictions, it is not even required that an attorney be present at a real estate closing. Instead closings are overseen by agents of the title or escrow company.) The closing attorney - or whoever oversees a real estate closing - is supposed to be a neutral third party. His job is to make sure everything is in order and all of the documents get properly signed and then properly recorded. Basically, the closing attorney's tasks include:

1) doing a title search to make sure there are no clouds on the title and, if there are any, working with the parties to get these cleared prior to closing;
2) verifying that real estate taxes on the property are properly apportioned between seller and buyer and are paid (either prior to closing or at closing);
3) coordinating the issuance of title insurance;
4) preparing all the documents that are to be signed at closing (the mortgage, promissory notes, truth in lending disclosures, and HUD Settlement Statement)or at least making sure that all documents were correctly prepared in accordance with the agreement between buyer and seller;
5) making sure everybody signs and initials everything in all the right places;
6) coordinating distribution of the sale proceeds after the closing (eg., transfer taxes and recording fees, pre-paid interest, realtor's commissions, payoff of prior mortgages/loans, etc.); and
7) making sure the deed, mortgage and other recordable instruments are properly recorded in the county land records after the closing.

Because an attorney who doesn't know what he/she is doing can royally screw up the whole process (eg., by overlooking a signature line, or forgetting to carry the documents down to the court house after the closing and get them properly recorded!) it is understandable that the bank wants to make sure that the closing is handled by someone competent. For this reason, most banks have a list of closing attorneys that they recommend. Some are pretty adamant that you choose someone off of their list...maybe because they've been previously burned by someone incompetent attempting to handle a closing.

However, while YOU are paying for the closing attorney's services (it is one of many fees that you'll see listed on the HUD-1 Settlement Statement) an attorney who was "suggested" by the bank will, of course, know that the bank is the one actually throwing business his way. An ethical attorney - and no, that isn't a contradiction of terms - will not let that factor influence him in the slightest. You can be fairly certain that the closing attorney will not deliberately do anything illegal to aid the bank at your expense. Such malfeasance would be evident in the documents themselves and could cause the attorney to lose his license.

However, even the best attorneys are human and, in a close call situation, they may act so as to ensure that they get further work from the bank. Thus, in practice, for example if you were ask a question that the bank might find embarrassing, an unethical settlement attorney MIGHT give you a glossed over response that doesn't really quite tell you what you need to know. And, the closing attorney is under no obligation to explain the meaning of any documents to you. Thus, you should NOT rely on the closing attorney to give you legal advice!

If you have any legal questions at all about anything related to the real estate transaction, you should ask an attorney that you hire separately to represent you.

You ALWAYS have the right to have your own attorney present at the closing to represent your interests even tho he/she would not be the "closing attorney." And, you should definitely have an attorney who represents you review all of the closing documents and go over them with you in detail well ahead of the closing date.

The bank or closing attorney should provide you with "preview copies" at least several days ahead of the scheduled closing date.

If your attorney doesn't go with you to the actual closing, take your preview copies with you to the closing. Carefully compare the final documents with the preview copies. If there are any differences between the two sets of documents, call your attorney (you should have his number on speed dial and make sure ahead of time that he will be available by telephone at the time of your closing) to explain what the changes mean and whether they are problematic.

Hope this helps clear up any confusion...

    Bookmark   June 6, 2012 at 4:40PM
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Sophie Wheeler

What Bev said. A closing attorney is not your attorney or the bank's attorney. He's the paperwork guy. And there isn't anything at all preventing you hiring your own attorney if you so desire.

    Bookmark   June 6, 2012 at 5:23PM
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Bevangel's correct - I didn't even think about the fact that the bank could have been talking about the closing attorney and they want to use one they know will do a good job. But I can't help but think that the attorney the bank recommends knows where his/her bread is buttered (the referrals that they hope keep coming) rather than the payer (you) who they will never see again. Human nature is what it is. That's why there's laws about representation.

We've moved a ton and sometimes it's a title company doing the closing, and in other states it's an attorney. However, in the states where it's a closing attorney, the bank made suggestions and our realtor made suggestions and ultimately we picked the closing attorney because *we're paying for it.* It was always our choice.

It is smart to pick an attorney that does closings, but there's more than one of those around. Ask your realtor who they like. They want deals to close, too, and their recommendations are more likely to be of benefit to the realtor and thus, you, rather than the lender.

    Bookmark   June 7, 2012 at 10:35AM
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Thanks Everyone! Bevangel Your detailed response really helped spell it out for us.

    Bookmark   June 9, 2012 at 2:43PM
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We asked for a list of bank attorneys and then selected one who the bank approved. It actually helped because they were able to facilitate everything smoothly because of the existing relationship. There were no issues with the bank because we used one of their attorneys. Although, I probably would not have used or selected this attorney if I had a choice, we did save money because we used this attorney. I actually reviewed every document as double checking is essential and i did not mind as much because of the savings...

    Bookmark   June 9, 2012 at 11:45PM
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