While the topic of this blog post is titled "Do I need an Attorney for my Connecticut Mortgage Refinance?" the better question is not if you NEED an attorney for your mortgage refinance in Connecticut, but SHOULD an attorney do your mortgage refinance closing? Of course as a CT attorney performing many mortgage refinance closings, you may consider my answer biased, but I say why would you NOT want an attorney to do your closing?
Answers people may give are expense and/or convenience.
Based on my own experience, the answer to both questions is that the attorney is usually no more expensive and just as convenient. I know in my own practice, my legal fee is very reasonable and is equivalent to that charged by non-attorney closing or escrow companies.
For every refinance someone or some company needs to do the closing. This includes handling the funds, explaining the terms of your new mortgage, explaining the closing process, paying off your prior mortgage, overseeing the proper execution of the closing documents, recording the new mortgage, verifying the proper release of your prior mortgage, etc. In Connecticut, refinance closings are currently handled by attorneys and by closing or escrow companies, which typically do not use an attorney to explaining or oversee the process. As an initial matter, the only person legally able to perform all those functions is an attorney, since a non-attorney cannot legally explain the legal impact of mortgage documents, which is the practice of law. So by not using an attorney you are losing the benefit of having an explanation fo what you are signing. The escrow or closing company are also typically chosen by the lender, are unlicensed, and have no legal obligation to the borrower. And after the closing, who do you ask if there is a question or a problem? With a local attorney you have a knowledgeable individual, licensed by the State of Connecticut, subject to ethical guidelines, and whose bank accounts are subject to audit by the State of Connecticut. Escrow and closing companies do not provide any of those protections.
But for many people, it is simply cost and convenience. So I would urge potential borrowers to find out what the non-attorney is charging, and then find out what an experienced real estate lawyer, naturally such as myself, will charge. I think you will be not only pleasantly surprised at the competitiveness of the attorney fees but their willingness to work with you and explain the closing process. In my case, I personally provide all answers and advice, and I am glad to speak to people about the closing process and what to expect.
With the new RESPA guidelines applicable in 2010 and the new Good Faith Estimate forms, shopping for settlement services (closing services) which are now called title related services should be easier. Rather than facing what is sometimes a variety of different charges, the new GFE is supposed to have all title related services as one charge plus the title insurance.
Along with the GFE the lender may supply you with a name or names of a company who can close your loan. However, except in limited circumstances where a lender has a closed list, any licensed Connecticut real estate attorney can close the loan. The new HUD GFE requires a list of provider(s) be given to the borrower, but for settlement services, closing services or title related charges, the borrower can and should still shop around (which the new GFE is designed to encourage!).
If you are considering a refinance, or other closing, in Connecticut, I encourage you to contact me directly for a specific quote on your closing costs and title insurance.