Lawyers all across Georgia may be holding useless checks from HomeBanc after paying out the same funds to their clients. Most states require mortgage companies to wire money or present cashier checks to the closing attorneys for home sales. Georgia will allow Lawyers to take ordinary checks. So the fast bankruptcy of HomeBanc has left Georgian attorneys who have paid out money from their escrow accounts at closings to clients now holding useless checks from HomeBanc to cover that money.
And there is very little the lawyers can do but to scramble and find ways to cover the checks they wrote so they do not bounce. A lawyer can be disbarred for bouncing checks, even though they are part of the collateral damage of the HomeBanc bankruptcy. The total amount of bounced checks by HomeBanc is reported to be 10 million but may be much higher.
Unlike many other states, Georgia’s “good funds” law allows lawyers to take an ordinary check from a mortgage company, rather than a wire transfer or cashier’s check. That may be why the collateral damage on the real estate bar is so much greater in HomeBanc’s bankruptcy case than in the failure of other mortgage lenders, said H. Gilman Hudnall of Hudnall Cohn & Abrams, a two-time past president of the Georgia closing-attorneys group.
“Some lenders – HomeBanc was one of them – pretty much insisted on doing their funding by check,” Hudnall said. Given HomeBanc’s regular volume of business and the average size of real estate transactions, Logan estimated that Georgia lawyers are looking at a minimum of $10 million worth of collateral damage from HomeBanc’s failure.
“Word on the street” in Atlanta puts the figure higher, said Sanford J. Gerber of Gerber & Gerber, a local real estate firm. via Forbes.com.
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Whatever did happen to Homebanc? They have gone under by now I'd imagine.
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