Found an issue on this page? Let us know and we will look into it as soon as possible.
What is a reasonable attorney fee for drafting an attorney opinion letter required by mortgage company for a home refinance?
Anonymous7 views5 answers
My home is in a living trust, and rather than having to take it out of the trust for the home refinance, the loan officer suggested that I obtain an "attorney opinion letter" which would require a review of my living trust, and drafting a letter stating that my revocable trust meets Fannie Mae and Freddie requirements and applicable State law. I have contacted the attorney who drafted my trust but he is on vacation and I need to find another attorney to handle this asap.
An opinion letter for an attorney creates an extra layer of liability for an attorney so no lawyer does this work for free knowing the risks. With that being said, ti would probably be something that would take a lawyer about 2-4 hours plus a premium for giving a formal opinion letter. I would say about $2,000-$4,000 depending on the lawyer.
The biggest issue that you will get into is the requirement that the Trust meets Fannie Mae and Freddie Mac requirements. After that, when not using the drafting attorney, the entire trust needs to be reviewed if the attorney is not the drafting attorney. I cannot say exactly the cost but Mr. Corrigan's time estimate is probably correct. My office charges more for the "opinion" because the opinion is intended foreliance by a third party.
That said, while an inconvenience, pulling the trust out and putting it back in, is not an issue. The cost to do so is minor and sometimes will even be done by the loan company. The cost for both deeds would only be a couple hundred dollars if done by an attorney.
Rather than have an attorney draft an opinion letter, I think it would be easier to have the home re-deeded to the Trust after it has been removed for the trust for refinancing purposes. The creation of a new deed and Preliminary Change of Ownership shouldn't take an attorney long at all (especially if the attorney who drafted your Trust has the legal description of your property already in his computer system), and the new recording fee shouldn't be much either (about $20). If the attorney who drafted your trust is returning shortly and you (or your spouse, if any) are not on your death beds, you may be just fine waiting until he or she comes back to create the new deeds.
I used to have a contract with a lender, and I've drafted a few hundred of these letters. Unlike most situations where you are paying for the attorney's time, an opinion letter is like buying insurance. The attorney is taking on any liability that could arise from him being wrong.
It's not uncommon to see an attorney charge .75% to 1% of the transaction size, with a minimum fee of $1,000 to $1,500.
If it's just in a revocable living trust, it's far easier to remove it from the trust and put it back after the refinance. You just have to make sure that you actually put it back.
