The practice of law in South Carolina does not involve the preparation and mailing of loan modifications.
The increase in foreclosures after the financial crisis led to an increased response from the lender. The use of a loan modification is the most common form of aid provided to borrowers. A large number of loan modifications have been entered into between borrowers and their lender in states across the country.
When the South Carolina Supreme Court issued its opinion in the case of Crawford v, there was a chance that the loan modifications with borrowers in South Carolina were void and unenforceable. The company is called Central Mortgage Company. There are 39, 744 S. 2d 538, The Crawford case had two foreclosure actions consolidated for review by the court. Modification of a loan without the participation of an attorney is not an unauthorized practice of law in South Carolina according to the Court ‘s decision. How does UPL play into the issue of whether a loan modification is legal ?
A quick review of the South Carolina history of cases on unauthorized practice of law is needed to understand the importance of the Crawford opinion. The practice of law in connection with a residential real estate closing has been determined by the South Carolina Supreme Court.
- The title is searched and the results are reviewed.
- The loan documents need to be prepared.
- The closing of a loan.
- Recording the title deed and mortgage.
- Disbursing the final amount.
The landmark opinion was issued by the Court in the case of Matrix Financial Services Corp. The location is Frazer,. 134, 712 S. The unauthorized practice of law when closing a residential loan on South Carolina property without the supervision of a licensed South Carolina attorney may prevent a mortgage holder from foreclosing on the mortgage in the future. The opinion was filed on August 8, 2011. This is the reason why the issue of UPL in South Carolina is so important.
Read more: FAQs | North Carolina State Bar
What would happen to the thousands of loan modifications created in South Carolina since the recession of 2008 if the Matrix decision were to be applied to them ? The borrowers claimed that since the loan modifications were not supervised by an attorney, the lender should not be allowed to enforce the obligations created by the loan modifications.
The court disagreed with the borrowers and held that the lender ‘s modification of an existing loan without the participation of a licensed South Carolina attorney did not constitute the unauthorized practice of law. The unauthorized practice of law can be found in the case of a residential real estate mortgage. Many in the legal community thought that the Court would extend its reasoning to the loan modification arena as well. The same public policy that requires attorney supervision for real estate loan closings and mortgage refinancing does not apply to loan modifications, despite the fact that the Court distinguished the facts in some of its previous decisions.
It ‘s clear that loan modifications do n’t have to be supervised by a licensed attorney in South Carolina, but the unauthorized practice of law decisions in the state should be taken into account when determining processes for completing loan modifications. As the legal requirements are developed through case decisions rather than through legislation, lenders need to keep informed on a regular basis with local counsel.