Mortgage Pool Attorney

Jonathan Hornik is a founding partner in the law firm of Larocca Hornik Rosen Greenberg & Blaha (LHRG&B) where he serves as co-chair of the Real Estate and Finance Department. His practice concentrates in the financing, investment and acquisition and generation of mortgages, mortgage pools and other real estate and commercial transactions.

Mr. Hornik has successfully handled many significant financing, real estate and other corporate transactions over his career. He has advised his clients in all aspects of transactional real estate and corporate matters, including, private placement memorandums, subscription agreements, limited liability companies, the acquisition and disposition of properties, businesses and other assets, operation and financing of projects, stock and asset purchases, institutional investments, credit facilities, joint ventures, partnerships, commercial lending and leasing. Jon has developed a specific expertise in workouts and the restructuring of loan transactions, frequently advising clients on the restructuring and disposition of loans and distressed real estate in and out of the foreclosure process. Prior to joining LHRG&B as partner, Mr. Hornik was Vice President and General Counsel of one of the nation’s largest direct private lenders. Mr. Hornik is an acknowledged expert in deal structuring and negotiation. Mr. Hornik has been admitted to the Bar in New York and New Jersey. LHRG&B is a business oriented full service Wall Street law firm with offices in New York and New Jersey.

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The following information is provided as a public service and not intended to provide legal advice.  Written by David Ruyle Attorney at Law
“Required Use” Definition & Effect
It has been my experience thus far that this is one of the most controversial revisions to RESPA (in addition to the disclosure of yield-spread premiums as a credit against loan pricing). The definition of required use was modified to reflect economic disincentives are as problematic as incentives. This definition does not eliminate the allowance to offer legitimate consumer discounts; however, the discount cannot be tied to the use of an affiliate settlement service provider. The new definition provided in the rule, “Required use means a situation in which a person’s access to some distinct service, property, discount, rebate, or other economic incentive, or the person’s ability to avoid economic disincentive or penalty, is contingent upon the person using or failing to use a referred provider of settlement services. In order to qualify for the affiliated business exemption under §3500.15, a settlement service provider may offer a combination of bona fide settlement services at a total price (net of the value of the associated discount, rebate, or other economic incentive) lower than the sum of the market prices of the individual settlement services and will not be found to have required the use of the settlement service providers as long as: (1) the use of any such combination is optional to the purchaser; and (2) the lower price for the combination is not made up by higher costs elsewhere in the settlement process”.
One of the most controversial issues regarding this new definition involves Home Builders. Home Builders are not considered settlement service providers, thereby eliminating any discounts or incentives provided by home builders to home purchasers when using an affiliated mortgage lender for their home financing, a widely used incentive by home builders. There are many companies in this situation that are scrambling at the moment regarding this item.

Average Charges
The final rule allows for average cost pricing (revised from the proposed rule and is now referred to as “Average Charges”). Settlement service providers can determine classifications of transactions to determine the average cost for their services. This average cost can be used in disclosing the associated charges for these settlement service providers. The total amount charged to the borrower cannot exceed these charges for the specific class of transaction. The same average charge must be used for all loans within that classification. Average charges cannot be based on loan amount or property value. This may be problematic for the title industry due to the manner in which they typically based the cost of title insurance. If average charges are not used, the charge to the borrower on the HUD-1 cannot exceed the amount received by the settlement service provider. HUD did give some guidance on determining classifications of transactions in that the settlement service provider may define the classifications based on period of time, type of loan and geographic area. Average charges must be recalculated every six months.

Escrow Account Provisions
The final rule eliminates outdated provisions regarding the phase-in period of aggregate accounting for escrow accounts. It additionally discusses the mortgage loan documents with regard to escrow cushions. If the escrow cushion as stated in the loan documents provides for a lower cushion than mandated by state or federal law, the loan documents apply. If the escrow cushion as stated in the loan documents provides for a higher cushion than state or federal law, then the state or federal law applies accordingly.
ESIGN Recognition
The final rule adds ESIGN as applicable to RESPA for electronic delivery of disclosures.