Real Estate & Property Law
Lawyers Learn $28 Million Lesson
Posted Aug 23, 2007 5:36 AM CST
By Debra Cassens Weiss
HomeBanc Mortgage Corp. bounced as much as $28 million in checks before filing for bankruptcy, causing headaches for Atlanta-area lawyers who went through with closings assuming the money would be there.
The Georgia Real Estate Closing Attorneys Association put the figure at $28 million, while HomeBanc says it bounced 134 checks worth at least $18 million, according to the Fulton County Daily Report.
Lawyers who weren’t aware of the lender’s troubles closed mortgages without waiting for the checks to clear. Then they had to scramble to cover escrow losses out of their own funds. A bankruptcy judge will allow the lender to surrender the mortgages it didn't fund to the attorneys who covered the loans.
Since the problem surfaced, some law firms are refusing checks and requiring that all funds be wired before a real-estate closing, lawyer Jennifer Dickenson told the legal publication. "There is a really high sensitivity right now to how we get the money into our accounts."