Legal Ethics Opinion #1565

Attorney's Compliance With Lender's Instructions Which may
Contradict Wet Settlement Act and Federal Consumer Law 

You have presented a hypothetical situation in which a law firm
has been retained by borrowers to represent them in the handling
of a refinance of their principal residence.  The lending
institution which the borrowers/clients have selected forwards
the attorney's office an agreement which must be signed by the
attorney prior to closing.  One of the conditions of the
agreement is that all closing documents are to be returned to the
lender within 24 hours of the settlement date.  This condition
applies to refinances.  You state that failure to sign the
agreement prevents the attorney from conducting the closing. 
Finally, you also state that signing the agreement and failing to
supply the closing documents subjects the attorney to a daily
fine imposed by the lender, as well as denial of funding.

You have asked the committee to opine, under the facts of the
inquiry, (1) whether it is unethical for a settlement attorney
who represents a borrower in a refinance to surrender original
closing documents to the lender prior to the borrower's three-day
right to rescind having run; and (2) whether it is unethical for
a settlement attorney who represents a borrower in a refinance to
surrender the original promissory note to the lender prior to the
borrower's three-day right to rescind having run. 

The committee has considered your inquiry and determined that the
issues raised call for an interpretation of the Truth-in-Lending
Act (15 U.S.C. 1601 et. seq.) as well as the Wet Settlement Act
(Va. Code 6.1-2.10 et. seq.) and thus present a legal issue the
resolution of which requires a determination beyond the purview
of the committee.
 

Committee Opinion
December 14, 1993