Continuing the news about local lender Homebanc’s recent bankruptcy filing (and the general meltdown of the sub-prime market), Forbes has an article about Georgia closing attorneys holding the bag for rubber checks.
"Some lenders – HomeBanc was one of them – pretty much insisted on doing their funding by check," Hudnall said. Given HomeBanc’s regular volume of business and the average size of real estate transactions, Logan estimated that Georgia lawyers are looking at a minimum of $10 million worth of collateral damage from HomeBanc’s failure.
"Word on the street" in Atlanta puts the figure higher, said Sanford J. Gerber of Gerber & Gerber, a local real estate firm.
Lawyers with deals in the pipeline have to be able to write good checks themselves or face possible trouble with the State Bar of Georgia, which takes a dim view of attorneys who write rubber checks.
"It’s putting attorneys in a very bad position," Gerber said.
The Atlanta Business Chronicle reports that Atlanta real estate law firm Neel & Robinson sued Homebanc in Fulton County Superior Court on July 8, 2007, "alleging HomeBanc bounced checks totaling $1.7 million for real estate closing costs, beginning in late July."
The Wall Street Journal has an article entitled Mortgage Woes Take Toll on Lender With Roots in Faith and WXIA has an article, No Place Like HomeBanc?