HousingWire sat down with Tom Black of Black, Mann & Graham, to find out how the firm is helping lenders operate under the unique laws of the Lone Star State.
HousingWire: What are some of the state-specific regulations that require lenders to do business differently in Texas?
Tom Black: From an industry perspective, there is one distinct area that sets Texas apart from the other states in the country.
Section 83.001(a) of the Government Code provides “a person, other than a person described in Subsection (b), may not charge or receive, either directly or indirectly, any compensation for all or any part of the preparation of a legal instrument affecting title to real property, including a deed, deed of trust, note, mortgage, and transfer or release of lien.”
As to the “directly or indirectly” charging or receiving any compensation prohibition contained in Section 83.001 (a), the leading case on point is Hexter Title & Abstract Co., Inc. v. Grievance Committee, Fifth Congressional District, State Bar of Texas, 179 S.W. 2d 946 (Tex.1944). In the Hexter case, the Supreme Court of Texas was reviewing an order enjoining the title company from practicing law by preparing deeds, notes, deeds of trust and releases. “Receiving compensation” was an element of the unauthorized practice of law statute in effect at that time. The Title Company’s argument was that no separate charges were made for the services. The Title Company held itself out as furnishing legal services without charge.
In rejecting such argument, the Supreme Court stated, “The furnishing of such legal services constitutes a part of the cost of obtaining the business transacted by the defendant. Evidently, it pays or the practice would be discontinued. It constitutes a part of the total services for which the customers pay. There is, therefore, “a consideration reward, or pecuniary benefit” flowing to the defendant for legal services so rendered.”
For Texas lenders, that means Texas-licensed lawyers must prepare lenders’ loan docs.
HW: How is Black, Mann & Graham uniquely qualified to help lenders with these challenges?
TB: Our firm understands the mortgage industry well. Prior to founding BM&G, I had the privilege of serving as president or production manager of some of the nation’s largest mortgage companies, and I’ve shared that experience with our team. We’ve been in the same shoes as our clients, and understand when there’s an issue, it must be resolved quickly. To that end, all 13 of our firm’s attorneys answer their own phones and provide cell phone numbers right on the business card. That’s unique in this business: lawyers who are accessible and make customer service a priority.
HW: BM&G provides not just mortgage doc prep, but fulfillment services and compliance. How does your expertise in each these fields inform the others?
TB: It’s not enough to just get documents to the table. They’ve got to be accurate. At Black Mann & Graham, we’ve established our own high standards of quality service, emphasizing being prompt, personable and precise. Our compliance services ensure that our customers understand Texas and federal legal requirements. In fact, we wrote the book on Texas cash out lending – literally – and we make it available to all BM&G customers. We were the pioneer of the Broker to Banker movement in Texas, establishing a warehouse line for our broker customers. BM&G offered fulfillment expertise to broker clients requiring help. Our fulfillment business continues to provide those same services today.
HW: BM&G places a premium on living out its values. What are some of the firm’s core values, and how do clients benefit from them?
TB: In the firm’s early days, we realized the importance of establishing values as a foundation for our business. Values govern how we treat each other and our clients, and keep us grounded and focused. We’ve made a video about our values that is posted on our website, and we emphasize them regularly when employees are onboarded and at company meetings.
At Black, Mann & Graham, we will:
• Conduct ourselves with integrity and trust.
• Maintain a customer focus – every customer, every contact.
• Demonstrate a caring attitude for our clients and for each other.
• Insist on teamwork and honest communication.
• Treat one another with respect.
• Improve continuously.
Living our charge to “improve continuously,” we set a goal of becoming the “Disney of Doc Prep” earlier this year. Like Disney, we started by defining our purpose – that intangible goal bigger than merely preparing documents. For us, our purpose is to partner with our clients to make the American Dream a reality. To achieve that purpose, we have to set quality standards much like Disney. For our firm, that means being prompt, personable and precise.
HW: What kind of resources do you offer — not just to clients, but to anybody in the mortgage industry?
TB: We believing strongly in sharing our knowledge with clients to help them better serve their customers. Our firm is known for this practice, and we offer training through videos, presentations, and our Clients and Friends Memos that recap and interpret issues, policies and regulations that affect us all, whether at the state or federal level. In addition, we speak regularly at mortgage functions. Our library is really one-stop shopping for a wealth of information found on our website’s Resources tab.
We have recently completed production on eight new videos to be released soon on a variety of important topics such as Texas Survey Requirements, Correction Instruments, and Renovation Loans to name a few.
Further, you can find us on social media – LinkedIn and Facebook – where we post best practices, industry news, profiles on our team members, and our work to support important causes and missions in the communities we serve.