real estate closings

SC Supreme Court Warns Closing Attorneys

Standard

Don’t be used as a “rubber stamp” or “rent” your name and status as an attorney!

businessman nametag for rentIn a disciplinary case filed on April 20,* the South Carolina Supreme Court publicly reprimanded an attorney for failing to properly supervise the disbursement aspect of a residential refinance closing. In a three-two decision, the Court pointedly seized the opportunity to warn residential closing lawyers.

The disciplined attorney worked as an independent contractor for Carolina Attorney Network, a management service located in Lexington, that provides its services to, among other entities, Vantage Point Title, Inc.  Vantage Point Title was described as a non-lawyer owned title company based in Florida. The attorney testified that 99.9% of his business comes from Carolina Attorney Network and that he had no direct contact with Vantage Point Title.

The attorney had previously been suspended for thirty days by the Court for failing to properly maintain his trust account. He stated in oral arguments in the current case that the suspension caused him to lose his ability to perform closings in the normal manner because he lost his status as an agent for a title insurance company. As a result, he said he was forced to handle closings through the management service.

The attorney testified that he didn’t recall the closing at issue, but he described the process. He said he receives closing documents via e-mail and reviews the title opinions. He verifies that a South Carolina licensed attorney completed the title opinions. He also reviews the closing instructions and the closing statements. He does not review the title commitments nor verify the loan payoff amounts. He conducts the closings and returns the closing packages with authorizations to disburse. Vantage Point disburses the funds, records the documents and issues the title insurance policies. Vantage Point then sends the lawyer disbursement logs showing how closing funds are disbursed. The lawyer reviews the disbursement logs to ensure they have a zero balance. He or an employee of Carolina Attorney Network reviews the online records of the ROD to verify that the mortgages are properly recorded.

The loan at issue had been “net funded” and the disbursement log did not “zero out”. The log showed a credit of approximately $100,000, and a disbursement of approximately $800. The Court stated that the disbursement log was inaccurate, and that the lawyer did not even know at the time of closing that the loan had been net funded.

The HUD-1 Settlement Statement in the closing at issue showed Vantage Point received approximately $800 for “title services and lender’s title insurance”, but attorney’s fees were not reflected. In fact, Vantage Point paid Carolina Attorney Network $250, and Carolina Attorney Network paid the attorney $150.

Vantage Point maintains a national trust account for all fifty states, but at some point, it opened “for unknown reasons”, according to the Court, a SC IOLTA account. Two checks were written on the IOLTA account for the closing at issue. When those two checks were returned for insufficient funds, the investigation by the Office of Disciplinary Counsel was triggered. Ultimately, all checks cleared, and no one sustained harm.

Doe v. Richardson is the controlling case. In this 2006 seminal case, the S.C. Supreme Court held that disbursement of funds in a residential refinance is an integral step in the closing and constitutes the practice of law. Richardson further held that although the attorney must supervise disbursements in residential closings, the funds do not have to pass through the supervising attorney’s trust account.

The Court stated the current case presents a situation where the lawyer conducted his duty to supervise disbursement in name only. He “rented” his name and status as an attorney to attempt to satisfy the attorney supervision requirement. There is no question, according to the Court, that the lawyer’s cursory review of the disbursement log did not satisfy the duty to supervise disbursement. The Court stated in furtherance of its concern that attorneys are being used as “rubber stamps” to satisfy the attorney supervision requirement in low cost real estate closings, and it took the opportunity in this case to expand upon Richardson.

The Court clarified that an attorney’s duty to oversee the disbursement of loan proceeds in residential closings is nondelegable. To fulfil this duty, the attorney must ensure: (a) that he or she has control over the disbursement of loan proceeds; or (b) at a minimum, that he or she receives detailed verification that the disbursement was correct.

The Court stated that, in practice, an attorney may find that utilizing his or her trust account and personally disbursing funds provides the most effective means to fulfil this duty. The Court stood by the Richardson holding, however, that residential closing funds are not required to pass through the supervising attorney’s trust account. It held that the attorney’s verification of proper disbursement, via sufficient documentation or information received from the appropriate banking institution, in addition to the disbursement log, is acceptable to fulfil this duty.

In essence, according to the Court, the lawyer was used as a “rubber stamp” for a non-lawyer, out-of-state organization with no office in South Carolina, whose involvement was not disclosed to the clients. The Court stated that it has insisted on lawyer-directed real estate closings in order to protect the public. The lawyer’s method of handling his client’s business was stated to provide no real protection and was held to be a “gross abandonment” of his supervisory authority.

Former Chief Justice Toal wrote the opinion for the Court. Justices Kittredge and Moore concurred. Current Chief Justice Pleicones dissented in a separate opinion in which Justice Hearn concurred.

The dissent characterized the case as a situation that through an error by a title company, the ODC became aware of a single closing where the attorney failed to explain the nature of a “net funding” transaction to clients who suffered no harm. Nothing in this single instance justifies a public reprimand, according to the dissent, nor justifies a modification of Richardson, adopting a non-delegable duty to oversee loan disbursements through “detailed verification” or through the receipt of “sufficient documentation or information” in addition to the disbursement log.

The dissent said that the majority neither explains what this means nor how more oversight could have prevented the title company from issuing checks drawn on the wrong account. In a footnote, the dissent accused the majority of imposing a “new, vague requirement on residential real estate closings”.

The real question becomes….what in the world will the next case on this topic hold?

*In the Matter of Breckenridge, S.C. Supreme Court Opinion No. 27625, April 20, 2016.

Another Win for MERS.

Standard

South Carolina Supreme Court tosses case against it brought by five Counties

MERSlogo

County administrators in five South Carolina counties were told they have no statutory cause of action against MERS in a case our Supreme Court dismissed on March 30.* Allendale, Beaufort, Colleton, Hampton and Jasper Counties brought suits against MERS and numerous banking institutions claiming their fraudulent practice of recordings disrupted the integrity of the public records.

The Supreme Court consolidated the five suits and assigned them to Business Court Judge Lawton McIntosh. MERS and the banking institutions filed a joint motion to dismiss, arguing the suit was barred by SC Code §30-9-30. The trial court denied the motion to dismiss, indicating dismissal is improper for a novel question of law. The Supreme Court granted cert and dismissed the actions.

MERS is a member-based organization made up of lenders, investors, mortgage banks and others. When a MERS lender takes a promissory note and mortgage, MERS is shown on the face of the mortgage as the nominee for the lender. The mortgage is recorded in the county where the real estate is located, and the loan is registered in the MERS system.

This system allows lenders to retain priority with MERS as nominee. MERS provides convenient framework through which its members can transfer notes and mortgages without having to record each assignment. As a result, the public records may not accurately reflect the true owners of mortgages.

The lawsuits claimed fraud, misrepresentation, unfair trade practices, conversion, and trespass to chattels. It sought a declaratory judgment stating MERS and the lenders had caused damage to the public index system by recording false documents. It requested injunctive relief barring further recordings showing MERS as nominee and requiring corrections to the public records. The prayer demanded direct and consequential damages to remediate deficiencies in the records, as well as compensatory and punitive damages in the event the errors could not be fixed.

The crux of the matter was surely the loss of income for the assignment fees, although that thought is never mentioned in the published opinion.

Sale of a house. Object over whiteThe statute, §30-9-30, allows a recorder to refuse to accept or to remove any document believed to be materially false or fraudulent or a sham legal process. MERS and the lenders argued the statute does not provide the counties authority to bring the lawsuit, and the counties argued that the statute allows them to bring the suit by implication. They suggest that the statute provides, by implication, the power to commence litigation to remediate the public records and to seek guidance from the Court. The Supreme Court declined to imply language into deliberate legislative silence.

The Supreme Court held that the lower court erred in declining to dismiss the suit on the ground that this is a novel issue of law despite the fact that earlier cases had held to the contrary. The Court stated that where the case involves simple statutory construction, the trial court should not deny a meritorious motion simply because the question is one of first impression.

According to the Court, the statute already provides a remedy to government officials by allowing them to remove or reject any fraudulent records. Will the counties attempt to utilize this remedy?  Only time will tell.

*Kubic v. MERSCORP Holdings, Inc. (Appellate Case 2015-001366, March 30, 2016)

Don’t Forget Significant FIRPTA Changes!

Standard

South Carolina real estate practitioners have the pleasure of dealing with two distinct sets of tax withholding laws, one for income of non-residents of South Carolina to be reported to the S.C. Department of Revenue, and the other for the income of “foreign persons” to be reported to the IRS.

FIRPTA frogThe Federal law, Foreign Investors in Real Property Tax Act (FIRPTA), saw some significant changes effective for closings on or after February 16 of this year following President Obama’s signing into law the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) late last year. New exemptions to FIRPTA codified by the PATH Act may encourage the flow of capital into the United States.

Under the PATH Act, when withholding is required, the amount to be withheld has changed, in most cases, from 10% to 15%.

The following summarizes, in simpler language than the Federal law, the withholding amounts required by FIRPTA as of February 16:

  • If the property will not be used as the buyer’s primary residence, the withholding rate is 15% of the amount realized, and reporting is required.
  • If the property will be used as the buyer’s primary residence and the amount realized is $300,000 or less, no withholding and no reporting are required.
  • house taxIf the property will be used as the buyer’s primary residence and the amount realized exceeds $300,000 but does not exceed $1,000,000, the withholding rate is 10% of the amount realized, and reporting is required.
  • Regardless of the buyer’s use of the property, if the amount realized exceeds $1,000,000, then the withholding rate is 15% of the amount realized, and reporting is required.

Real estate practitioners, sellers, buyers and others with questions concerning FIRPTA compliance should consult tax advisors.

Feds Play Shell Game in Manhattan And Miami

Standard

Title companies obligated to ID true owners behind shell entities.

Will this obligation migrate closer to home?

money launderingSecretly purchasing expensive residential real estate is evidently a popular way for criminals to launder dirty money. Setting up shell entities allows these criminals to hide their identities. When the real estate is later sold, the money has been miraculously cleaned.

The Federal government is seeking to stop this practice.

The Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury issued orders on January 13 that will require the four largest title insurance companies to identify the natural persons or “beneficial owners” behind the legal entities that purchase some expensive residential properties.

This is a temporary measure (effective March 1 to August 27) and is limited to at this point to the Borough of Manhattan in New York City, and Dade County, Florida, where Miami is located. In those two locations, the designated title insurance companies must disclose to the government the names of buyers who pay cash for properties over $1 million in Miami and over $3 million in Manhattan. FinCEN will require that the natural persons behind legal entities be reported if their ownership in the property is at least 25 percent.

FinCEN’s official mission is to safeguard the financial system of the United States from illicit use, to combat money laundering, and to promote national security through the collection, analysis and dissemination of financial intelligence.

FinancialCrimesEnforcementNetwork-Seal.svgThese orders are a continuation of FinCEN’s focus on anti-money laundering protections for the real estate sector. Previously, the focus was only on transactions involving lending. The new orders expand that focus to include the complex gap of cash purchases.

FinCEN’s Director, Jennifer Shasky Calvery, was quoted in the agency’s press release: “We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money.”

American Land Title Association officials met with FinCEN to confirm the details of the orders. Michelle Korsmo, Executive Direction of ALTA, indicated that ALTA is supportive of the effort but is concerned that the program must be implemented in order to determine whether it will work. She said it will be difficult for a title insurance company to figure out a transaction involving a major drug kingpin who buys a mansion through a string of shell corporations all over the world.

This phase of the new program is being called temporary and exploratory, meaning that it may or may not work, and if it does work, it may or may not be expanded to other locations. (Query:  why won’t a money launderer who seeks to purchase residential real estate during the initial phase of this program, simply change locations to Chicago, Houston, San Francisco or Los Angeles?)

We have no way of knowing whether or when this program might be expanded to South Carolina, but it is entirely likely that expensive properties along our coast are being used in similar money laundering schemes. Will South Carolina closing attorneys enjoy ferreting out this sort of information for the Government? We will keep a close watch on what occurs in New York and Florida during the first 180 days of this program.

So You Say Ninety Percent of TRID Loans Contain Violations?

Standard

Worse than rocket science? Perhaps.

thumbs downAccording to a news report from American Land Title Association, Moody’s Investors Services has written that several third-party firms found TRID violations in more than 90% of the loans that were audited.

ALTA states that Moody’s report indicates that this “informal feedback” was based on reviews of around 300 mortgages from around a dozen unidentified lenders, and that many of the violations were “only technical in nature”, like spelling errors. But Moody’s is apparently concerned that the secondary market may be affected by the sheer number of violations.

There appears to be a disconnect between this reporting and the perception of Director Richard Cordray of the CFPB. In a speech at the Consumer Federation of America, Director Cordray recently said that the housing industry’s concerns about TRID appear to have been “overblown”. He said that reports from industry participants across the market seem to be indicating that implementation of the new rule is going “fairly smoothly”. He even stated that the anxieties in the market were much like the predictions of technological disasters stemming from Y2K, which never materialized.

What do we, as South Carolina attorneys, do with this information?

  1. Take some comfort in the fact that we are not the only ones struggling with TRID.
  2. Do the best we can to comply with TRID rules.
  3. Do the best we can to comply with South Carolina Supreme Court requirements that we fully disclose all funds involved in closings. I believe we must prepare and deliver closing statements, in addition to TRID required Closing Disclosures, to make the proper disclosures. ALTA’s closing statements, which should be available on all the closing software programs, are excellent forms to use.
  4. Talk to each other about the struggles. Collectively, we should be able to resolve some of the problems.
  5. If you need backup on a position, call your title insurance company lawyers. They are hearing it all these days and may be able to help with a particular lender or an odd position.
  6. Lenders are attempting to shift the burden of compliance to closing attorneys through indemnity
    language being inserted in closing instructions or by separate letter. Closing attorneys should resist
    agreeing to this additional liability if at all possible. Negotiate! Be strong!

And if all else fails, I understand that NASA is taking applications for the next class of astronaut candidates. Maybe alternative employment is possible.

astronaut

 

Federal Housing Finance Agency Announces Conforming Loan Limits for 2016

Standard

The maximum remains the same in most markets

FHFA LogoSpeculation earlier this year was that the Federal Housing Finance Agency (FHFA) would increase the limits for conforming loans in 2016 above the current amount of $417,000. But FHFA recently announced that the current limit would remain in place for most of the country.

The limit is increased above $417,000 in only 39 counties in the United States. The so called “high cost” counties are located in the metro areas surrounding Denver, Boston, Nashville and Seattle as well as four counties in California.

By way of background, a conforming loan is a mortgage loan that meets the guidelines established by government-sponsored enterprises Fannie Mae and Freddie Mac. Conforming loans require uniform mortgage documentation and national standards dealing with loan-to-value ratios, debt-to-income ratios, credit scores and credit history. Conforming loans are repackaged to be sold on the secondary market. Because Fannie and Freddie do not purchase non-conforming loans, there is a much smaller secondary market for those loans.

The FHFA publishes conforming loan limits each year. Loans above the conforming limit are considered jumbo loans, which cannot be purchased by Fannie and Freddie and which typically have higher interest rates.

The Housing and Economic Recovery Act of 2008 established a baseline loan limit of $417,000 and required that after a period of housing price declines, the baseline loan limit cannot be increased until housing prices return to pre-decline levels.

The Strange Appearance of Title Insurance Rates on the New Closing Disclosure

Standard

calculator paperIs this what the CFPB intended?

South Carolina closing attorneys are in the throes of their first closings under the new CFPB rules. Title insurance company offices are fielding all kinds of unusual questions as everyone works through their first few sets of documents. And our collective eyes are having difficulty adjusting to the appearance of title insurance rates on the new Closing Disclosure.

Under the filed rates of the title companies in South Carolina, we have a simultaneous issue rate of $100 for a second policy in a transaction. Typically, the owner’s liability amount and premium are higher, so the simultaneous issue rate of $100 is the charge for the loan policy.

The South Carolina Department of Insurance (SCDOI) requires us to disclose the true cost of an owner’s policy over the cost of the loan policy. We have been accustomed to referring to this charge as the “difference plus $100” because we take the difference in the full cost of both policies and add the $100 simultaneous issue fee to arrive at the number the SCDOI requires.

Let’s look at an example:

In a purchase transaction, the sales price is $455,000, and the loan amount is $409,500.  The full premium for the ALTA Homeowner’s policy is $1,290.60, and the full premium for the loan policy is $981.00. In the past, the title and software companies’ rate calculators would have shown:

ALTA Homeowner’s policy rate: $1,290.60 (full premium)
Loan Policy (standard rate): 100.00 (simultaneous issue fee)
$1390.60 (total)

For the SCDOI required disclosure, we would have shown:

ALTA Homeowner’s policy rate: $409.60 (difference plus $100)
Loan Policy (standard rate): 981.00 (full premium amount)
$1390.60 (total)

The total of the two calculations was always consistent.

Now, the CFPB requires that the total cost of the loan policy be disclosed and any simultaneous issue discounts must be shown against the owner’s policy. That’s ok with our South Carolina eyes because we can use our “difference plus $100” calculation to reach the same result.

The problem occurs where there is a reissue credit. While the CFPB never specifically addressed how to handle a reissue credit, the agency was clear that the loan policy premium had to be reflected in full. So most of the title and software companies have decided to take the reissue credit from the owner’s policy premium as well.

In our example, let’s assume that there was a prior ALTA Homeowner’s policy in the amount of $315,000. The reissue credit would be $468.90 (half the full premium for $315,000), so the new total cost would be $921.70 ($1,390.60 – $468.20), and this is where the problem becomes more challenging:

ALTA Homeowner’s policy rate: $ -59.30 ($409.60 minus the credit of $468.90)
Loan Policy (standard rate): 981.00 (simultaneous issue fee)
$921.70 (total)

The total is the same (and correct in our collective view), but notice the negative number as the cost of the owner’s policy.

We have decided in our office to think about it this way. The Closing Disclosure is not a replacement for the HUD-1, and it is not a closing statement. It is simply what it is entitled, a closing disclosure that the CFPB requires for the consumer borrower.

We are going to have to prepare other documents (closing statements, disbursement analyses) that will allow us to properly disburse and to completely disclose each disbursement as required by the SCDOI, not to mention the South Carolina Supreme Court! And our eyes are just going to have to adjust to those negative numbers!

Thanks to Cris Garrick, the IT guru in our office who figured this out and convinced me it’s correct!

SC Supreme Court Decides Family Equitable Mortgage Case

Standard

…and dirt lawyers are gratified to see the deeds called deeds!tug o war

On Oct. 28, the South Carolina Supreme Court decided a family dispute surrounding a transaction between a deceased brother and his sister and held that two deeds to the sister were, in fact, deeds, and did not constitute an equitable mortgage*.

While Justice Kittredge’s dissent suggested the Court established a “categorical rule” that only evidence created contemporaneously with a conveyance can be considered in support of an equitable mortgage, the majority, in a footnote, disagreed with Justice Kittredge’s interpretation and signified subsequent events and writings may assist in determining the intent of the parties at the time of the conveyance.

After two appeals, the facts remain murky.

Kenneth Walker owned and lived on a 200-acre farm in Colleton County. In 1996, he conveyed 26.52 acres to his sister, Catherine Brooks. The stated consideration was $13,250, although Brooks testified she paid nothing. In 2002, Walker conveyed an additional 15.16 acres to Brooks for the stated consideration of $5.00.

According to Brooks, her brother conveyed the property to her because she supported him emotionally and financially. She testified that she paid his debts, paid his electric and telephone bills, bought his groceries, gave him cash for living expenses, helped him receive social security benefits and served as trustee for those benefits.

In 2004, at Walker’s request, Brooks wrote a note stating that Walker intended proceeds from sand removal and soil and waste water discharge onto the property would be paid to Brooks until she received $60,000. Walker and Brooks also generated a ledger that began with an entry of $60,000 and ended with an entry of $27,400.

It is clear that Brooks did not exercise control over the property.

deed - definitionBefore Walker died, his attorney sent a letter to Brooks referring to this note and ledger, and requesting her to tender a deed in exchange for $2,893.87. This amount was inexplicable, according to the Court.  After Walker’s death, his son and personal representative offered to pay Brooks $27,400 in exchange for a deed. Brooks refused, and this dispute arose.

The special referee held that the note and ledger showed that Walker was indebted to Brooks at the time of his death, and the conveyance was intended as security for the debt. He found the existence of an equitable mortgage, and held that the estate was entitled to the property upon payment of $27,400. The Court of Appeals reversed, and the Supreme Court granted certiorari.

The Supreme Court, referring to a C.J.S. article and a prior case, indicated that the existence of an equitable mortgage must be shown by clear and convincing evidence, and that the intent of the parties must be evaluated at the time of the conveyance.  The court referred to the personal representative’s “self-serving testimony” and the fact that Brooks did not exercise control over the property as the only evidence that the parties intended to establish an equitable mortgage at the time the property was conveyed. The existence of the note and ledger were discounted as not being contemporaneous with the deeds.

Justice Kittredge would have reinstated the trial court’s finding of an equitable mortgage, denouncing the Court’s “categorical rule” in the face of these “equitable, fact intensive inquiries.” He found the existence of the note and ledger persuasive that the parties intended that the conveyance was, in legal effect, a mortgage.

Like dirt lawyers everywhere, I like certainty when it comes to deeds and find the Supreme Court’s holding comforting.

 

 

*Walker v. Brooks, Appellate Case No. 2013-001377

Grace Period for TRID Enforcement? Sort of ….

Standard

hourglassOn October 1, Director Richard Cordray of the CFPB, responded to a request* from the American Bankers Association (ABA) for clarification on how the TRID rules will be enforced in the first few months of implementation. The answer was complicated but ultimately signified examiners will initially look at the good faith efforts of lenders to comply.

The letter, which copied 17 industry trade associations, recognized the burden on the mortgage industry to make significant systems and operational changes and engage in extensive coordination with third parties. Initially, according to the letter, examiners will evaluate a lender’s compliance management system, implementation plan, staff training and overall efforts to comply, recognizing the scope and scale of the necessary changes. The letter stated:

 “Examiners will expect supervised entities to make good faith efforts to comply with the Rule’s requirements in a timely manner.”

As a vote of confidence, the letter concluded that this examination process will be similar to the agency’s approach after the January 2014 effective date of several mortgage rules, where the experience was “our institutions did make good faith efforts to comply and were typically successful in doing so.”

No time limit was stated for this initial examination methodology.

On October 6, Fannie Mae and Freddie Mac followed with announcements that they will not conduct routine file reviews for technical compliance with TRID but will evaluate whether correct forms are being used in the closing process. Fannie and Freddie expect lenders to make good faith efforts to comply with TRID. Failure to use the correct forms will be deemed a violation of the good faith effort standard.

Lenders were reminded that Fannie and Freddie have several remedies for a lender’s violation of law that may impair the ability to enforce notes and mortgages. But the announcements stated that the remedies will be used in two limited circumstances in connection with TRID: (1) where the required forms are not used; and (2) where a court of law, regulator or other authoritative body determines that a practice violates TRID and impairs the ability to enforce the note and mortgage or would results in assignee liability

No time limit was placed on this grace period.

On October 16, Federal Housing Administration’s (FHA) Office of Single Family Housing announced that it will not include technical TRID compliance as an element of its routine quality control reviews, except to determine that correct forms were used, until April 16, 2016.

Efforts are underway in Congress to establish a formal grace period until January 1, 2016. The Homebuyer’s Assistance Act has passed in the House and is up for a vote in the Senate.

*The request was made by the ABA to FFIEC, which is comprised of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Comptroller of the Currency, the CFPB, and the State Liaison Committee.

At the Intersection of Football and Mortgage Fraud

Video

Five time NFL Pro-Bowler jailed

football fieldIt’s a sad day in South Carolina! Post-flood, many South Carolinians are reeling from the damage to their homes and businesses. Many are dealing with insurance companies and FEMA, and more continue to boil water and dodge blocked roads and bridges. And in the midst of our State’s recovery, legendary Coach Steve Spurrier is hanging up his visor after eleven years coaching our beloved Gamecocks. As I was thinking about the idea of loss today, I decided to write about a place where football and real estate (in this case real estate fraud!) intersect.

We need only look back as far as October 2, when retired NFL wide receiver Irving Fryar was sentenced to five years in prison by a state court in New Jersey on charges of conspiracy and theft by deception. Fryar’s mother, Allene McGhee, was given three-years’ probation on the same charges.

Irving Fryar was the first wide receiver to be the NFL’s number one draft pick in 1984 when the New England Patriots made him their top selection. In his remarkable 17-year career, he played for the Patriots, the Dolphins, the Eagles and the Redskins. He played in Super Bowl XX with the Patriots and scored the Patriots’ only touchdown in that game in their loss to the Bears. He made it to the Pro Bowl five times and retired in 2001.

He was, at times, a troubled player. In 1986, he missed a game after being injured in a domestic dispute with his pregnant wife. In 1988, he was arrested on weapons charges. There were also headlines involving drug use, depression and even attempted suicide. But he purportedly turned his life around. While still playing, he received a Ph.D. from the North Carolina College of Theology and became a minister. After retirement from the NFL, he founded New Jerusalem House of God in his home town, Mount Holly, New Jersey, and became its preacher. He was also a regular speaker at the NFL rookie symposium and a high school football coach. His message in all these capacities was “don’t do what I did”, and “it’s never too late for salvation”.

So where did this redemption story run off the rails? Prosecutors argued in a three-week jury trial that Fryar and his mother, along with a financial advisor who testified against them, used false employment and income information to close six home equity loans on Ms. McGhee’s home in Willingsboro, New Jersey in 2009 in a six-day period.  Loan applications stated that Ms. McGhee earned $6,000 per month as an events coordinator at her son’s church. Each lender agreed to make a loan on the belief that it would be in first lien position. Four of the loans were closed in a single day! Only a few payments were made, and the lenders had to either foreclose or write off their loans.

This mortgage fraud scheme will sound familiar to Columbia lawyers. Matthew Cox a/k/a Gary Sullivan moved to Columbia in the summer of 2004, buying two homes in northeast Columbia communities. He convinced the sellers in both transactions to enter into seller financing transactions. He forged mortgage satisfactions on the sellers’ mortgages and subsequently obtained multiple institutional mortgages on both properties within several days in February of 2005, amounting to more than $1 million. He then disappeared. This scam was widely reported in the real estate community in Columbia and in newspapers in three states. Matthew Cox was a former Tampa mortgage broker who was eventually convicted of mortgage fraud in Florida, South Carolina and Georgia and served time in federal prison.

I will never forget the phone call from a Columbia lawyer who said courthouse abstractors discovered this scheme on the day of the closings by conferring about the name of the borrower whose title they were all updating!

SpurrierNo dirt lawyer looks back with nostalgia at those days of loose lending practices that were a major factor in the global financial crisis. But Irving Fryar’s story is a reminder that the clean-up from those days is not over!

Now back to football. Steve Spurrier is an outstanding coach who has done a remarkable job in our state. I wish him good luck and God speed in retirement. Now, let’s find our next great coach!