FORCE

5 TheFiveStar.com | CoalitionConnection Can I Get a Witness? Lenders teaming with title companies in Georgia need to be wary of witness-only closings, which are a no-no in the Peach State. By JASON THURBER, ASSOCIATE, RUBIN LUBLIN W itness-only closings have always been a hot topic in Georgia. For the uninitiated, a "witness-only" closing occurs when a Georgia licensed attorney sits with a borrower to sign their closing/loan documents and purports to act just as a witness or notary and claims no responsibility for any other part of the closing process. Both the Georgia Bar and Supreme Court have taken an active role in ensuring that witness-only closings do not occur in the state of Georgia. With the new CFPB regulations governing lenders in the mortgage origination and closing process, the topic of witness-only closings is heat- ing up yet again. CFPB regulations require lenders to actively manage their third-party vendors and hold the lenders accountable for those vendors' actions. It is estimated that there are nearly 30,000 settlement providers in the United States, so as can be imagined, maintaining accountability for each individual settlement service provider becomes a daunting task for a national lender. In an effort to sustain appropriate over- sight, many lenders have made the move to narrow their list of "preferred providers" of settlement services and are shifting toward partnering with national title companies that claim to be able to manage closings in all 50 states. "is becomes an issue with states that require attorneys to handle all aspects of real estate closings, like Georgia. National title companies must partner with local attorneys to be able to handle closings in attorney states. "is is where the slippery slope be- gins. Many of these title companies want to control the closing process internally while operating outside of the state, since they have the direct relationship with their lender client. "ey then engage a Georgia licensed attorney to physically sit at the table with the borrower for the closing. If the Georgia attorney agrees to this and does not have any other direct relationship to the closing process, this practice could constitute a witness-only closing, which is forbidden in Georgia. "e State Bar of Georgia recently published a revised advisory opinion on this topic, Formal Advisory Opinion No. 10-R2. "e opinion clearly states that a Georgia attorney who performs a witness-only closing violates the Georgia Rules of Pro- fessional Conduct. Under Georgia law, an attorney must handle a real estate closing, which includes review of documentation, resolution of any errors in paperwork, review and clearing of title issues, and otherwise acting with competence in the closing transaction. Under the opinion, the "lawyer has an affirmative obligation to review the work product and may not use it unless he/she revises it if necessary, approves it, and adopts it as his/her own. "e lawyer is responsible for the entire closing transaction and each document used in the transac- tion …" Additionally, the opinion holds that when a lawyer purports to act merely as a witness, he or she is misrepresenting the role of a lawyer in the closing transaction. National lenders who are part- nering with national title compa- nies as their preferred settlement providers need to be aware of the rules in Georgia and should be sure that their title company vendors are partnering with attorneys or law firms in Georgia that understand the rules regarding witness-only closings and unauthorized practice of law. Only then can the lender be comfortable that they are meeting their obligations to their consumers under the CFPB.

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