Conference 7.286::dcu

>    Its common knowledge that closing costs are inflated to bring in more
>    profit  to  the  lending institution. Lawyers that work with a lender
>    and do many closing on a volume  business  do  not  get  $700.00  per
>    closing  even  though  the  DCU  charges you $700.00 to pay for their
>    "DCU" lawyer.
>
>    Its probably not common knowledge  that  this  practice  is  actually
>    against  the  law,  but difficult to enforce. Closing costs are to be
>    charged only for costs incurred. It is illegal for lawyers or  anyone
>    else  to  kickback  part  of there fees just because they are getting
>    volume work from a lender.
>
    What makes you think think that this is so?  What is common knowledge
    about it?  And what makes you think that the Attorney-General's office
    wouldn't take immediate action against the offending institution and
    attorneys?
    
    My wife's an attorney and has done many closings as a bank's
    conveyancing attorney.  AT NO TIME did she receive less than the
    attorney's fees listed in the closing documents.  All cost are paid at
    closing and the attorney takes their fee according to the listed fee
    which always appears in the HUD Settlement Statement (Page 2).  As part
    of the bank's disclosure statements when the loan is accepted is one
    which gives you an estimate of the attorney's fees and other closing
    costs.  While $700.00 may be high (depending on the amount of the
    mortgage, it usually included the costs of the title search which I
    have seen vary from $100 to $1000 (A complicated problem title).  I
    have never heard of any attorney giving money back to the lending
    institution, especially as the money is all in the attorney's hands
    for a short duration (a day or two, depending on day of the week and
    whether or not it is a refinance).  It's the only time that I've seen
    the attorney get paid in time.
    
    If you personally know of an attorney who is returning part of his/her
    fees to the lending institution, please lodge a written complaint with
    the Attorney-General's office instead of make unsubstantiated claims
    here.
    
    Incidentally if Abby Financial is only charging $200 for attorney's
    fees, I'd 1) be suspicious, since no attorney would be doing the work
    for practically nothing (you've no idea how much work there really is in
    doing a closing), 2) they're not disclosing all legal costs (title
    search and plot plan are probably extra rather than included, for
    example), 3) they're tacking on the extract costs to the mortgage and
    not telling you, 4) Grab it while you can, you'll never get a better
    deal.
    
    
    			Danny

>     BTW  several years ago I took out a second mortgage with the DCU. Not
>     only did the DCU not charge me any closing costs but the DCU sent  me
>     a check for several hundred dollars as a bonus for opening the second
>     mortgage line of credit with them.

Check the rate on the mortgage.  DCU, several years ago issued two types
of second mortgages.  In one, the rate was set by the DCU (and the BOD)
and one was set at prime + 1.5%.  I had the formerly and also received
several hundred dollars back.  As of 1/92, the rate was 9.5% - about
1.5% higher then  prime + 1.5%. 

>     I  believe  Shawmut and some other banks offer no closing cost second
>     mortgages. Why is it they can do this on a second mortgage  but  then
>     need  to charge $1700.00 on a refinance to cover there expenses, even
>     if your refiancing with the same lender. 

This may have to do with the secondary market for mortgages. Since
second mortgages are floating rates and have no interest rate risk, the
banks tend to hold on to them and do enough legal work to satisfy
themselves.  First mortgages may be sold on the market and may have to
meet all the requirements of Fannie Mae, Freddie, etc.


Gim

I believe that the purpose of a lawyer at a closing is that he protects his
clients interest in the closing of the sale. 

At the closing of our house last year, we ended up in a situation where the builders lawyer and ours was present.
Our lawyer was conversing with the builder's lawyer while we were signing papers
that we passed by our lawyer. At one point our lawyer told us to stop due to a
technical problem which he and the builder's attroney resolved but we had to
close one month later. When I related this story to our neighbor, he told us of
how his attorney didnot look after his interests in the sale and ended up paying
for it in a large way.

Depending on the financial institution and the seller and the risks involved,
I would rather have an attorney at closing who I felt did not have a conflict
of interest with the other parties involved, especially if I'm paying them to
represent me.

My parents used one from a list provided by the bank and ending up paying for
something at their closing that the seller should have paid for. By the time
they realized it, it was a week after the closing and the attorney was no longer
"available" for anything. The attroney did however make $600 for the deal.

    RE:.3  In general you are correct.  The conveyancing attorney
    represents the interests of the bank and noone else.  The buyer
    especially should consider having their own lawyer present at the
    closing to ensure that they only pay what they need to, there are no
    problems with the conveyancing, that the mortgage and other loan
    documents are correct and don't require them to do things that they
    didn't expect (like errors in costs).  While the bank's attorney is
    making sure that title is being conveyed properly, they are only
    interested in ensuring that they have the first lien on the property
    (which is why they make sure that all taxes have already been paid and
    usually escrow the property taxes).  The Sellers have less need of an
    attorney, but need to make sure that they get their money and that
    there is someone there to negotiate for them in case of a last minute
    hitch in closing.  At no point does the conveyancing attorney represent
    either the Buyers or the Sellers, just the bank (Unless there's no bank
    involved of course).
    
    Two other pieces of advice: 
    1) Most banks will allow you to pay your own property taxes if you have
    enough equity in the property.  You need to ask and there is (yet
    another) form for you to sign at the closing acknowledging this.
    2) Get Title Insurance for yourself.  The bank makes you pay for
    getting title insurance coverage for itself.  All banks to that. 
    However, the insurance covers only them and not you unless you ask for
    that additional coverage.  You cannot recover anything without it if
    there is a problem with your ownership of the title to the property.
    
    		Danny
    

    Rather than require our attorney to be present at our closing, we told
    him the time of the appointment and asked him to be in his office so
    that we could contact him if necessary.  It was, and he was able to
    help us overcome a potential problem.