The Trusted Adviser
July 2008 | Volume 1 · Number 2

Real Estate and Title Insurance News

A Big Opportunity for Lawyers But Will They Grab It?

This commentary originally appeared in the June 10, 2008, issue of the Condell Private Letter; reprinted here with permission.

When all the smoke clears from this great mortgage disaster, will attorneys be winners or losers? Will there be more lawyers at closing tables or will the steady march away from representation for residential buyers and sellers continue?

Historically, the key word was "routine." To the extent residential sales became more routine they became more easily handled by lay people. In large swathes of the U.S. it became possible to get through transactions using standard forms, well-established customs, and a sense of common purpose, leaving little to fight about. If problems cropped up, there'd be enough talent at the table to provide quick, sensible solutions. And away they'd go.

Unfortunately, the world has thus been made safe for the hotshot mortgage lender of the early 21st century. The word "routine" was killed in a hurry.

Computers helped. Mortgage "products" could be flashed in front of borrowers faster than the average Joe could figure them out. Credit score manipulations, rate-versus-points options, blizzards of possible upfront fee arrangements, and the good old bait and switch helped put lenders miles ahead of average borrowers, even those of good intelligence. The result has been a couple of million foreclosures, a lot of heavily damaged families, and a grossly wounded economy.

The recovery has begun. Solutions are a dime a dozen, but none yet calls for mandatory legal representation. Credit counselors, the emerging genusdu jour,yes, but lawyers, no.

If the legal profession has its wits about it, any time that a lender counts on borrower inability to understand the terms of the mortgage he's signing, a wrong is being committed, one requiring someone with a little legal firepower to sit next to the borrower at the closing table. Also a wrong that has consequences for the lender perpetrating it.

So far, however, in our society it's okay for a smart lender to take advantage of a not-so-smart borrower as long as he gives the borrower enough time to read the documents.

It's not that the legal profession is powerless. Using a blunt instrument called "impact on small business," Representative Don Manzullo of Illinois fought HUD Secretary Jackson to a standstill on Guaranteed Mortgage Packages while all the major title insurers rushed to be first out of the barn with its own package programs, programs they despised. Or should have despised.

Again, if the legal profession has its wits about it, secondary market purchasers will be taught to prefer mortgages executed by borrowers who had legal counsel present.Theirlegal counsel, not just any legal counsel.

Will the legal profession step forward this time and grab it?

EDITOR'S NOTE: The Condell Private Letter is a management-level newsletter of information, commentary, and opinion focused on the land title business, published since 1992 by The Fort Sherman Group, Inc. Fort Sherman is a sister company to Condell & Company, Inc., a management consulting firm concentrating exclusively on the title industry. Fort Sherman recently launched, a resource and "rallying point" for people in the title industry.

THE TRUSTED ADVISER is published by Attorneys' Title Guaranty Fund, Inc., P.O. Box 9136, Champaign, IL 61826-9136. Inquiries may be made directly to Mary Beth McCarthy, Corporate Communications Manager. ATG®, ATG® plus logo, are marks of Attorneys’ Title Guaranty Fund, Inc. and are registered in the U.S. Patent and Trademark Office. The contents of the The Trusted Adviser © Attorneys' Title Guaranty Fund, Inc.

[Last update: 7-9-08]