Buyer Beware
DO CLOSING ATTORNEYS CHARGE JUNK FEES?
Sadly, yes – some closing attorneys do add what we would consider “junk fees” to the costs of closing a real estate loan.
We worked with a client who was the seller in the transaction and used the closing attorney the buyer had stipulated in the sales contract. That attorney added a $250 charge to get tax liens released. While it’s true that occasionally the tax commissioner fails to release a lien when it’s been paid in full, all that’s required is a faxed-in request for release, and we take care of that as a part of our standard closing fee, at no extra charge.
Common “junk fees” you might see on the closing disclosure are wire fees, post-closing fees, document-handling or document-prep fees. Origin Title & Escrow performs all those tasks, but it’s included in the $450 settlement fee. Our total fee for title search and settlement is $750 for a refinance and $850 for a purchase. The only additional charge would be for title insurance.
The buyer picks the closing attorney and is typically the one who pays the closing costs. Real estate agents who work mostly with buyers – especially first-time buyers – will enjoy working with a closing attorney with a simple and transparent fee structure.
CAN REVERSE MORTGAGE FUNDS BE USED TO FUND ANOTHER INVESTMENT?
A reverse mortgage allows the 62+ year-old homeowner to refinance their home and receive the equity as a line of credit or a payout directly to them. Its purpose is to give seniors a chance to use the equity in their homes to help with living expenses, and it closely resembles a home-equity loan.
And it is a loan – it accrues interest and it must be paid off upon death or when the homeowner isn’t able to live in the home any longer. It could be tempting to think of taking that lump sum and investing it, but that is contrary to the intended purpose of the loan. The homeowner will likely lose access to the money, and wouldn’t be able to use it to supplement their living income.
In 2006, a few unethical lenders working with equally unethical financial advisors were caught taking advantage of seniors, forcing them to invest in specific ways. The Housing and Economic Recovery Act of 2008 made it illegal for reverse mortgage lenders to be affiliated with other financial or insurance products.
Loan officers who don’t have a lot of experience with reverse mortgages would be wise to talk with a closing attorney who does, so they will understand what borrowers can legally do with the money they receive.
PROTECT YOUR MONEY FROM WIRE FRAUD SCHEMES DURING CLOSING
Sending an e-mail is like mailing a post card. Unless it is encrypted, there are ways other people can read the message and see what is in it. Even though e-mail is easy, it also has its dangers. Anyone in the world can try to read it, and even change what was written.
Criminals who specialize in fraud have taken notice. Fraudsters can mimic an e-mail address or domain trying to trick people into wiring funds to the wrong account. An unsuspecting buyer can get an e-mail that looks like it is from an attorney or real estate agent with instructions on sending their funds to the closing attorney. Can you tell the difference between ‘lawfirm.com’ and ‘lawfirrn.com’? These are two different domains. One is ‘L A W F I R M . C O M’ and the other is ‘L A W F I R R N . C O M’. People read e-mails fast and it is impossible to catch subtle differences in the spelling like this.
Technology has made it simple to create professional looking documents. The drawback is that it also makes it easy for the fraudsters to create similar looking documents and instructions. Even a fax or encrypted e-mail may be dangerous because criminals can also fax and send encrypted e-mails. ALTA has created a short video to show how this scam works.