CNN recently posted a video on their website detailing the “shocking” tale of a woman who paid her mortgage but whose home is being foreclosed upon, jumping on the fraud bandwagon and telling the tales of homeowners preyed upon by the real estate & banking industry. The video leaves out more than it tells, in an obvious attempt to manipulate the truth for their tale.
Maria Espinosa, a Nevada realtor, apparently bought her home, without counsel and without purchasing an Owner’s policy of title insurance. It appears that a previous owner in the chain of title had a VA mortgage that was never satisfied and as such, brought an action to foreclose. She sought redress from Chicago Title who advised her to retain a lawyer and visit the ALTA website, wherein the message was to potential home buyers to buy title insurance so that if there is a title claim, the title company will not only insure the property but pay to defend such title. Ms. Espinosa finally retained an attorney who admits he has only 18 months of experience in real estate and foreclosure defense who just states “he has never seen anything like this before”.
I learned of this video through the New York State Bar Association Real Property List Serv’s forum wherein my esteemed colleagues brought up a valid point yet again – why would anyone, who is about to make one of the largest buys of their life, choose to do so without retaining a real estate attorney? This topic is discussed, ad nauseam, on the listserv but is often not publicized…until today and here on my blawg.
I am amazed at the mentality of the realtors and abstract companies of other states who are so resistant to attorney involvement, nevermind the
Federal Trade Commission, which for years has lobbied heavily against having attorneys involved in residential
real estate transactions. But, it has become clear, in light of the collapse of the Housing Market, that the rationale was to keep the people blind to the greed of those certain mortgage brokers and bankers, realtors, appraisers and title companies who made fortunes selling homes riddled with toxic mortgages and funded with fraud, kickbacks and the like. They told those people, “We are saving you money”, “It is like buying a car” or “The attorneys are just trying to control everything and get rich in the process”. What they didn’t tell them was “We want you at the closing table with NO ONE to look after your interests” or “We want you to take out a loan you can’t afford or know”.
Numerous times I have engaged in discourse, in various internet forums, with members of the real estate industry who had been vocal and derisive of attorney involvement in real estate transactions. I heard their closing horror tales of deals falling apart because of the lawyer’s failure to prepare contracts in a timely manner or instructing their client to not go forward etc. While I agreed with them that retaining any attorney for a closing was not conducive, I argued that the retention of a real estate attorney was a necessity and would eliminate their apprehension. A real estate attorney has a far different focus than the average litigation attorney and the expertise to close a transaction without issue. Most importantly, the real estate attorney is the only party who only represents the interest of the buyer or seller and probably one of the least of the expenses paid at closing, especially compared to the thousands of dollars paid over to the realtors.
In New York State (particularly downstate), it is customary to retain attorneys for real estate transactions. And it shows: New York had a 23% decrease in foreclosures in 1st Quarter 2009 as compared to 1st Quarter 2008 and compared to a 24% increase nationally!
So, while I am sympathetic to the plight of Ms. Espinosa and others out there in the same position, I can’t help but shrug my shoulders and say it all could have been avoided or at the very least, addressed with no out of pocket expenses, had she had a lawyer at her side when she bought that home.
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- Real Estate Law Update: New York State Decisions of Interest
- Buyer $5,000 Short – How to Close the Gap…from a NY Point of View