Posted by SShoreDude on 2/3/09 4:03pm
Msg #276435

Interstate Commerce/Title companies beware

I will post more info on this later, (after I am paid) but this has been amazing....

I was contacted by a title company from out of state (I am in an attorney state) to do a closing. I did it. Apparently the title company said they were attorneys in Massachusetts to the lender who then wired them funds. Title company took weeks to payoff the borrower's mortgage, and eventually the borrower called me to help. I worked for about a week and eventually contacted the title insurance company to intervene, as they would be on the hook insuring the transaction if the mortgage was eventually not paid.

Eventually the mortgage was paid off, but not before the FBI (!) called me to gather information and facts regarding this unscrupulous title company. This is fraud and involves interstate commerce. I fear they may be in serious legal trouble, I hope I see my fee paid before the Feds shut them down. Main thing I think is these title companies need to beware and make sure they are indeed qualified to close loans in attorney states before they go ahead and close them. This negligence can lead all the way back to the lender if they are not careful.

As I said, more info will follow once I am paid....

Reply by Linda_H/FL on 2/3/09 4:10pm
Msg #276439

What are your restrictions on doing signings in MA...does the attorney have to be physically present? On the phone? Sign off on certain aspects of the signing?

Just curious...

Reply by MikeC/NY on 2/3/09 6:22pm
Msg #276450

"Main thing I think is these title companies need to beware and make sure they are indeed qualified to close loans in attorney states before they go ahead and close them. This negligence can lead all the way back to the lender if they are not careful."

From what you posted, I think the TC was well aware of what they were doing - they represented themselves as MA attorneys, so they knew what the MA requirements are. This sounds more like a case of attempted fraud rather than simple negligence.

Hate to say this, but barring a miracle I think you could probably kiss your fee goodbye...

Reply by BrendaTx on 2/3/09 7:17pm
Msg #276459

Maybe I'm wrong, but isn't SShoreDude an attorney?

Reply by Susan Fischer on 2/3/09 9:00pm
Msg #276468

That was in my memory too, Brenda. But then, I don't

tend to trust my poor old memory anymore.

Hoping you get paid, Shoredude...and how great the borrowers could count on you to rattle chains...

Reply by Linda_H/FL on 2/3/09 9:05pm
Msg #276470

Ah..okay - I didn't know...I know SReis is an attorney - didn't know Sshore was...

Sorry Dude!!...<G>

Reply by MikeC/NY on 2/3/09 10:59pm
Msg #276486

"Maybe I'm wrong, but isn't SShoreDude an attorney?"

Could be, but the point he made was this:

"Apparently the title company said they were attorneys in Massachusetts to the lender who then wired them funds."

Still smells like attempted fraud, no?

Reply by Susan Fischer on 2/3/09 11:36pm
Msg #276488

Walking and talking like the proverbial duck... n/m

Reply by Julie/MI on 2/3/09 9:31pm
Msg #276474

Fail to see your point

"Main thing I think is these title companies need to beware and make sure they are indeed qualified to close loans in attorney states before they go ahead and close them."

Above is your quote. Seems your main concern is regarding attorney only states. What the heck difference does an attorney only state have to due with the fact that title didn't pay off the existing mortgage?

It doesn't matter if an attorney who is also a notary public or little old Julie the notary in Michigan (without a law degree) obtains the signatures and sends them back to the title company. What hill of beans does it matter whom sends the executed docs back to title and then title decides not to fund? I MUST have a screw loose tonight, because I don't get your reasoning.

Reply by BobbiCT on 2/4/09 7:02am
Msg #276495

The point of this informative post ...

For any lenders/title companies lurking: Be careful when doing business in a state you are NOT qualified to do business in. You may get caught .... and the POWER of the state to collect its "doing business in" fees, penalties for failure to file/qualify, and taxes will come back to bite you in the $$$$ (particularly in bad economies), plus the Feds looking for interstate commerce issues. (Remember how they caught Al Capone. "Mail fraud" is another good avenue to make it a Federal offense.)

For anyone "party to" the transaction (person who go documents signed and dropped them in the FedEx or UPS box): You are a "party to it" and will be deposed, questioned, and until proven innocent considered a "part of the problem". Plaintiff goal: Find out who know what when and who "helped". Even if you did nothing wrong, it will cost you time (and maybe money) to produce/respond to what the Plaintiff's attorney and/or investigators are looking for.

For states that have BOTH non-attorney and attorney closers: Just dumb. When the borrower can go back and ask an attorney (the person they had face-to-face contact with), "What happened?", the "bad" entity is in trouble. The in-state local attorney has a vested interest in representing the best interests of the in-state local consumer; because the next time the consumer thinks to do something "legal," s/he may look to that attorney the next time s/he needs legal assistance (will, power of attorney, real estate transactions). Also, an attorney, regardless of who s/he represents, has certain state ethical/malpractice etc. guidelines and standards they MUST follow or risk penalties from the Judicial system that governs them. Not all attorneys are perfect or "goodie two shoes"; however, they have a greater risk of losing ALL their business or never working again than a non-attorney.

Off topic: Recent CT case interesting. Our "validating act" cures missing witnesses and other "stupid" errors after two years. It doe NOT cure adding witnesses to a mortgage deed after it is signed. Not surprising, the Court viewed this as FRAUD, not an "error or omission." Great way to delay this particular foreclosure action: Question now is, is the mortgage Valid and Enforceable because it contains fraudulent signatures?

Reply by Kevin/Ct on 2/4/09 1:56pm
Msg #276525

Re: The point of this informative post ...

There is another avenue for the lender to pursue in the event that the mortgage in your example is invalid. Provided there are no intervening liens or mortgages recorded on the property since the mortgage was recorded, the lender can sue for money damages on the note, and initiate the suit with the prejudgment remedy of attachment of the same real estate. If there are no intervening mortgages or liens since the recording of the mortgage the attachment has the same priority.

Once the lender wins the suit on the note ...it can record a judgment lien which relates back to the recording date of the attachment for purposes of priority. The lender can then foreclose the judgment lien.

In the event that there are intervening mortgages or liens on the subject property the lender can attach other real estate owned by the borrower or garnish funds through the prejudgment attachment/garnishment. I have done it...not for a lender but for a client that was fortunate enough to sue someone with a number of different assets. It was simply a matter of selecting the property(ies) which were most likely to satisfy the judgment with the least effort. The defendant can also post a cash or insurance bond in lieu of the attachment/garnishment which is even better because it is simply a matter of demanding payment through an execution. (Above is Connecticut Law)

Reply by Kevin/Ct on 2/4/09 2:09pm
Msg #276527

Re: The point of this informative post ...

Meant to mention that I am assuming that the borrower's signature is genuine, but not the witness's.

Reply by SShoreDude on 2/4/09 9:34pm
Msg #276565

Re: Fail to see your point

The point is that if I as a licensed attorney didn't pay off the mortgage, the borrower could have just reported me to the board of bar overseers, and the title insurance company would have insured the loan, and my license would be on the line. Pretty serious.

But since the title company acting as escrow agent failed to payoff the mortgage, they are involved in interstate commerce, and the FBI is now involved, calling me and factfinding. Way more serious than the previous sitution.