"THE FIRST THING WE DO, LET’S KILL ALL THE LAWYERS"

-- WILLIAM SHAKESPEARE

Although Shakespeare’s admonition is widely accepted, there is a more important lending industry concern: not to let lawyers kill the loan.

As the CMBS industry evolves, ratings run rampant. But who rates the lawyers? We recommend that lenders and correspondents in rating lawyers ask the following questions:

Are legal fees in line with industry standard?

For loans of less than $5,000,000, fees should be capped at $6,000. The only justification for greater fees are excessive negotiation of loan documents, unusual or unforeseen circumstances, or special non-form documentation required because of special factors affecting the underwriting or rating of the loan.

How quick is counsel?

Efficiency sounds more polished, but in the end everyone wants a lawyer who acts "quick". Initial draft sets of loan documents should be sent to new borrowers within 48 hours of the closing counsel’s receipt of file. If required by circumstances or special needs, closing counsel should generate draft loan documents sooner. On all issues, the lawyer must work on a "rapid response" basis.

Is closing counsel a scribner or a CMBS lawyer?

Closing counsel must understand the needs and demands made upon originators and correspondents (who among other matters, want their borrower back for another transaction), as well as underwriters (whose underwriting considerations may or may not appear in a loan commitment as intended). Closing counsel should also be able to command the immediate response of title professionals and others such as surveyors who prepare third-party reports.

Does counsel understand the securitization process?

Good decisions are made by lenders and correspondents in the closing process when they are assisted by closing counsel who understands the securitization process and how loans are rated. The removal of any combination of two or more words in any loan document may result in a particular loan being "tossed" by B-Piece buyers or others, which ultimately cuts to the lenders bottom line.

How aggressive is your closing counsel?

The arena for aggressive behavior is in the court room and not in the context of closing loans. Passive aggressive strategies by closing counsel who quietly but firmly press forward with protecting the lender’s interest is required. Just as Americans want politicians who are "compassionate-conservatives", lenders and correspondents need closing counsels who are "flexibly firm".

Is closing counsel a team player?

Better yet, your closing counsel should be a team leader who understands the required element of coordination between originator, correspondent, title officer, and escrow officer. If the in-house closer for the lender or correspondent is assuming the role of team leader, then look for closing counsel to be a good co-captain.

Where is your closing counsel’s focus?

To paraphrase a worn out political phrase, "It’s the closing, stupid." Your closing counsel must never lose site of having a loan close on the targeted date or sooner.

What is the quality of work of your closing counsel?

Your closing counsel should have command of legal issues, good writing abilities, a good understanding and broad background in all aspects of real estate law -- combined with the attitude that made great Mrs. Field’s chocolate chip cookies: "Good enough never is!"

The level of services provided by closing counsel raises the level of a borrower’s respect and appreciation for both lender and correspondent. Providing a good profit to the bottom line of lender and correspondent, as well as good services to a borrower, requires that your closing counsel has more than simply the ability to dot "i’s" and cross "t’s", but to help make the loan.