Banks & Banking   – Mortgage Foreclosure – Attorney Preference Statute – Ascertaining Borrower Preference – Telephonic Application System

The use of a telephonic application system to ascertain a mortgage borrower’s preference for counsel, later confirmed in writing, satisfied a lender’s obligation under the Attorney Preference Statute.

We reverse the grant of defendant’s motion for partial summary judgment on its Attorney Preference Statute counterclaim.

Decedents obtained a mortgage from plaintiff. Plaintiff’s telephonic loan application system does not permit the name of a borrower’s attorney, if the borrower has one, to be entered in the application. If a borrower does not have counsel, the application is forwarded to plaintiff’s affiliate company, which acts as the settlement agent and subcontracts with attorneys. Decedents declined services of legal counsel on plaintiff’s prepopulated form, which was identical to the form promulgated by the South Carolina Department of Consumer Affairs, except that DOCA’s form states that the borrower has been informed of the right to select legal counsel whereas plaintiff’s form provides a list of attorneys to select from.

After plaintiff filed the present foreclosure action, defendant, representative of decedents’ estates counterclaimed, arguing plaintiff waived its right to foreclose by using a prepopulated form in violation of statutory and case law. Defendant moved for partial summary judgment on its counterclaim; plaintiff cross-moved for summary judgment, arguing that defendant’s claims were barred by the statute of limitations, that it complied with statutory requirements, and that any alleged violation could not invalidate the note and mortgage. The special referee granted defendant’s motion for partial summary judgment.

We agree with plaintiff that it did not violate the Attorney Preference Statute. We note that the DOCA form provides a safe harbor for a creditor. We find that plaintiff used DOCA’s form but prepopulated it according to the borrower’s telephonic responses. We rule that plaintiff complied with the statute’s requirement for plaintiff, as the lender, to ascertain the borrower’s preference for legal counsel by verbally confirming during the telephonic application process and later confirming in writing that decedents did not have an attorney preference.

Reversed.

Quicken Loans, Inc. v. Wilson (Lawyers Weekly No. 011-008-19, 7 pp.) (Paul Short, J.) Appealed from Barnwell County (James Martin Harvey, Jr., Special Referee) Benjamin Rush Smith, III, Allen Mattison Bogan, Carmen Harper Thomas, and Brian Montgomery Barnwell for appellant; Charles L. Dibble, Steven W. Hamm, Daniel Webster Williams, and C. Bradley Hutto for respondents. S.C. App.