Homebanc Screws Attorney’s
For years when Homebanc sent a loan package to a closing attorney they also sent the check to fund the loan. So last week when loan packages and checks were sent to closing attorneys it was somewhat business as usual with the exception that the attorney’s knew that Homebanc was not going to originate anymore loans. Closings took place, sellers loans were paid off, funds were dispersed to all applicable parties and then the fun begins. The checks to fund these closings were not honored, or in other words they bounced. Then all of a sudden Homebanc files for bankruptcy protection, leaving the closing attorney’s holding the bag, an empty bag in this situation, of funding loans that Homebanc originated. Homebanc has indicated that they intend to service the loans in their portfolio. Since Homebanc did not fund these particular loans, wouldn’t it make sense to allow the closing attorney’s that are effected the opportunity to service the loans that they ended up funding?
Fortunately not all closing attorney’s in Metro Atlanta got hit with this not too pleasant surprise. However, the ramifications for anyone buying and selling real estate may be felt for years to come. This situation lends itself as a catalyst for creating changes in the way closing attorney’s do business. They may very well only accept wire transfers or certified funds from lenders, buyers and sellers.
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Wow - thats just not right. And you are correct, that will probably cause most closing attorneys to adjust their procedures in how they do things.
Did Homebanc file Chapter 7? or 11? The persons that got left holding the bag, might be able to make a claim against them.
Hi Maloc. Homebanc filed for protection under Chapter 11. I spoke with one of the attorneys and they would like, if nothing else, to service the loans or be able to pay to have them refinanced with another lender at the same terms. While I do believe that this will all be worked out in the end, it may be a year or so before a solution is known.
BTW, how are things in Kentucky? I have realatives in the Bowling Green and Sturgis areas.
Things in Kentucky are actually going pretty well. We didn’t see the big swings downward that a lot of other parts of the country are experiencing. Its probably what would be called a “soft” buyer’s market right now. There is some value to making a home purchase - but you aren’t going to negotiate 25% of its value right off the top or anything crazy like that.
From what I’ve read, Atlanta seems to be doing alright as well. Do you find it to be a decent market?