Jordana Greenman
Many of us have been licensed attorneys and title agents in the commonwealth of Massachusetts for several years. Personally, I write title policies for First American Title Insurance Co. and WFG when handling closings. It seems easy: the seller/borrower signs an authorization, and we obtain payoff statements for residential loans. However, having experienced new hurdles, wrinkles and traps thrown in by at least one national bank, my trust in the process has been shaken. Wisdom may now dictate that conveyancers include an escrow agreement and hold back provisions for every transaction.
The purchase and sale agreement for this particular transaction hit my desk in early March. Title, plot plan and municipal lien certificate were ordered immediately and the seller, an elderly woman who was recently moved to a nursing home, notified the lender that the property was under agreement. Upon attempting to obtain a payoff statement, the seller was told to request the statement in writing because the mortgage was in default and that further information would come via mail within 10 days. An authorization to obtain information was then provided to me so that I could request the payoff from my office.
The frustration mounted as I had to fax a new request, try again when given a second number and yet a third time with a new number after being assured my request would be processed that day. It seemed like a typical “call center” approach with potential consequences much larger than a typical monthly service bill. Eventually, a payoff statement was faxed to me with a “good-through” date of March 31.
Over the next few days, I received no fewer than five additional faxes from the lender with identical payoff statements and good-through dates. I carefully reviewed each fax to make sure neither the amount nor the good-through date had changed. The last fax I received was on March 26, and contained identical information to that sent to me throughout that week. I closed on March 27, sent the payoff check on March 30 and received my delivery confirmation March 31.
The Cost Of Winterizing
On April 3, I received a call from the lender informing me that the property was winterized March 17, but the costs were not included in the payoff statement since they only hit the account on April 1. I demanded to know what authority the lender had to enter the property, but received no answer. Instead, the lender demanded I pay an additional fee for alleged services rendered in the amount of $210. Further investigation revealed these services rendered related to an illegal entry by the bank into the property for the alleged purpose of “winterizing.”
This was outrageous – it was Friday afternoon before a Jewish holiday, and I needed it resolved before the end of the day. I eventually spoke to someone who told me I was not authorized to discuss the account, despite already having faxed my authorization to three different numbers. Then I spoke with someone who told me that “payoff figures can change at any time.” While I do not dispute that charges may change, it seems reasonable and necessary that when they do, an updated payoff statement be sent to the closing attorney with an explanation for the change is included. This particular payoff was sent to me on the eve of my closing and, as the bank acknowledged, the fee itself did not hit the account until after I sent a check!
My check is clearly stamped received on March 31, yet they did not call me until April 3. In an effort to calm me down, the broker (Melanie Bissonnette of Riverside Realty) covered the illegal fee without knowing it should really be waived by the bank. I would like to get the money back for her, but she is more interested in making sure this never happens to any other homeowner who has informed a bank that the property is being sold and has not yet fully vacated! As an attorney closing loans for more than eight years, I have never experienced what I view as such extreme misconduct. It was not only illegal for the bank to enter and do work in that home, the attempt to charge me and/or the seller for it while refusing to negotiate my payoff check certainly constitutes a violation of M.G.L. c. 93A. As the closing attorney representing the buyer, I cannot legally pay the money they demanded, as the purchase funds had been fully disbursed.
This could potentially put my own license in jeopardy if I have to explain to my client that the property may be subject to someone else’s mortgage – and I am sure neither of the title companies for whom I write would be thrilled. The post-closing adjustment agreement is only worth the paper it is written on in light of the fact the seller is unable to pay.
No foreclosure process had been commenced on this property, no demand letters had been sent and a payoff was requested by the owner long before the repairs were made. This is unacceptable, as it puts me as an attorney dangerously close to breaking the law. Though not typically a whistleblower, I reported this incident to the CFPB. I hope my story serves as a warning to others and grounds for new regulations ensuring it never happens again.
This article first appeared in the May-June issue of REBA News, the newspaper of the Real Estate Bar Association.
Jordana Roubicek Greenman is a Boston-based sole practitioner with a focus on
real estate law.
