Head real estate lawyer gives us all the tricks
It’s one of the last, but arguably most crucial, elements of the mortgage process: the point at which a broker sends their client’s application over to a lawyer to verify that everything’s in order before signing off on the deal.
It’s also one of the stages that most commonly sees delays and requests for further information, with Diamond and Diamond’s Joseph Berljawsky (pictured) telling Mortgage Broker News that there are a few easy steps brokers can take to help lawyers close deals in a quick and smooth manner.
One of the first requirements often overlooked or misunderstood by brokers, he said, are accepted forms of ID, which are different for lawyers than they are for brokers. Images of two forms of ID are required – both front and back – and a SIN number and health card won’t suffice. Passports, driver’s licenses, and signed credit cards are all documents that constitute acceptable proof of ID for lawyers.
Brokers could also benefit from a better understanding of the process lawyers must go through when a deal lands on their desk. Berljawsky said that there was often an assumption that it was simply the case of lawyers quickly signing off on a deal, when the reality is much more complex.
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“Understanding how the transaction works is a pretty important thing for brokers to speed the process along,” he said. “We often get a lot of calls the same day that a deal is sent, asking when it can be closed.
“That’s not necessarily productive. It’s better for brokers to know what lawyers need to do to close. We have to meet with clients, request for funds, and actually get the money, too. So, understanding the basics of how all this works is definitely useful.”
The length of time it takes to close a deal depends on a few different factors – but the process is rarely complicated if lawyers are able to receive the necessary information early.
“Usually, we can close it on the closing date that was scheduled if all the required factors are in place,” Berljawsky said.
“If you’re done on your end as a broker, but you’re waiting for the lawyer to get the instructions from the bank, then you’ve just lost two days on your closing. If you have everything – IDs, void cheque and other requirements – and you can send it to the lawyer as soon as you know that it’s going to be instructed, then the lawyer can get started on it before it’s instructed.”
The lawyer can then call the client, get them to send their basic information and details like marital status and who’s signing, meaning that by the time they receive instruction, all that’s required is to set up the signing and close.
“If a broker wants to close on the closing date, they should send everything they have as soon as they can to the lawyer,” Berljawsky said. “Don’t wait for the lawyer to do it, because then the lawyer’s just going to be reactive and not proactive.”
Another thing brokers can do to speed up the process is related to debt payouts. Berljawsky said that clients often become irritated when lawyers request these, assuming that the broker will have already given them to the lawyer “which is rarely the case.”
With that in mind, Berljawsky recommended that brokers provide the lawyers with the debt payouts as soon as possible – and make sure that the account number is clearly legible on the documents.
It’s also important to make sure that clients are aware they might not secure the full amount of funding they expect – otherwise, if things don’t go to plan, they could end up having to redo most or all of the deal.
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“If a client wants to redo their windows and they want $20,000 to do it, and the broker tells them that they’re getting that amount but then at the lawyer’s office it turns out that they’ll only get $10,000, they’re going to go right back to the broker – and then you’ve got to redo the whole deal,” Berljawsky said.
“Setting realistic expectations about the amount that borrowers are actually going to get would definitely speed things up.”
Lawyers having to wait for broker conditions to be completed is another factor that commonly slows the process – while Berljawsky also identified language issues as something that should be addressed at an early stage in order to make sure things go as smoothly as possible.
“If there’s a language issue, don’t try to ignore it,” he said. “If the client comes into the meeting with the lawyer and the lawyer feels that the client doesn’t understand them because of a language barrier issue, we’re going to have to make another meeting with a translator.
“It’s definitely a good idea not to gloss over that, and give the lawyer a heads up about the appropriate measures that need to be taken.”
Keeping those points in mind, Berljawsky said, would eradicate some of the most common mistakes or oversights that can slow up the mortgage process, and make things easier for broker, lawyer and customer alike.