Closing Agents and a Home for the Holidays

Sherri Jefferson is an advocate, author, and an attorney. Transforming the lives of children is her passion. Transferring knowledge is her profession.

Homeownership has been defined as the “American dream.” Many people work toward investing in a piece of the pie.
In recent years, the real estate industry has been placed under a microscope for practices that led to the mortgage crisis and mass foreclosures. Georgia consumers suffered. What, if any, programs and services have been put into place to protect lenders and consumers?
Today, membership organizations operating under the auspice of “best practices” are key components to law firms and title companies who solicit perspective buyers to purchase title insurance, which is not required under Georgia law.
Title insurance is necessary to protect lenders and buyers from fraud and defective or unmarketable title (ownership issues with deeds and recordation).
Most companies operate legitimate businesses and work exclusively to protect the lender. However, some companies engage in title insurance services and engage in acts to procure the purchase of buyers’ title insurance without the authorization, knowledge, or consent of the buyer.
Some will engage in acts to the detriment of the buyer, seller, and lender by refusing to close the loan without the purchase of a policy and suggest that their inability to close is due to an error with the title when it is because the title insurance underwriter has refused to secure information desired to sell a buyers’ policy. In fact, while operating on behalf of the lender to confirm marketable title, some of these companies will gather information solely for the purpose of selling the buyer title insurance. Most buyers will be unaware of the added charge to their closing settlement statement, while others may not be informed that title insurance is not required to purchase a home or to obtain a loan.
Is there a conflict of interest? Are buyers being forced to purchase title insurance without just or legal cause? Should closing companies be required by law to reveal that they are owned and operated or have a joint venture as a title company to all parties in the real estate transaction?
The role of closing companies is to ensure marketable title. In an advanced technological and informational era, title searches and their online databases makes this process easier than ever. Most delays in procuring title searches and attaining clear title are due to demands by closers for information demanded by title insurance underwriters and not per their lenders requirements.
Closing agents are required to work exclusively for the lender. When this does not occur, the buyer and seller suffer because the closing company will refuse to close the loan due to title underwriting issues and not for failure to comply with the lender qualifications.
In this regard, the buyer and seller are either forced to take steps not required under Georgia law to finalize a home sale. A buyer may have to find another home or the seller has to pay for services to complete closing that is not required by law.
Most states simply require a notary to witness or verify signatures at closing on behalf of the lender. Other states require closing agents or attorneys to fulfill the same duty. When the closing agents have a dual role that includes financial benefits to them or their company, those benefits may create a conflict of interest. Those benefits may outweigh their commitment to the lender and consumer and cloud their professional judgment. Disclosure is critical to avoid these issues and rules separating the dual role of closing agent and title insurance company or underwriting.
Finally, when a decision is made to deny closing of the loan or issue clear title, the closing agent must put in writing whether it is due to failure to adhere to a lender requirement or the title underwriters requirements for owner or buyers’ title insurance.

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Fayette Newspapers  - 210 Jeff Davis Place, P.O. Box 96 Fayetteville, GA 30214 - (770) 461-6317 • To access legal notices visit http://www.georgiapublicnotice.com/.