Last week, I blogged about the case of Matrix Financial, Corp. v. Frazer in which the South Carolina Supreme court ruled that lenders cannot foreclose if they were found to be engaging in the Unauthorized Practice of Law (UPL). In real estate, the SC Supreme Court indicated that lenders are required to have attorney review of title search, document preparation, and close of escrow.
Well, it doesn’t take long for the lenders to take action (or their political puppets). It turns out that a state representative has introduced a bill to end the Unauthorized Practice of Law mandate of the Matrix Financial case. Predictably, this representative was the founder and shareholder of a South Carolina bank that violated the UPL regulations. Sounds like Barney Frank!! LOL
I researched the proposed bill and it has only been introduced and not gotten very far. It seems pathetic that state representatives can totally ignore their constituency and put their own (and campaign donors) interests ahead of the public.
Further research indicates that Suntrust Mortgage has as much as 1 BILLION dollars in uncollectable real estate notes because they never used attorneys to review title, prepare documents and close escrow. All of their construction to perm loans required a loan modification agreement at the end of construction. Many times this agreement changed the amount and terms. These clearly needed to be prepared by or reviewed by an attorney and apparently they never were.
We are in a push and pull legal real estate environment. Courts and legislatures are at odds and even within any jurisdiction; there are what appears to be inconsistent results. I have blogged about that too – the appearance of inconsistencies is the result of different facts and standard of review. The standard of review varies based upon the legal history of a case (appeal, ruling and determination by dispositive motion, final judgment by a judge or jury). So, as I have mentioned previously, it is essential to review cases and outcomes on a case by case basis.
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