Escrow Officers or “escrow closers” in Washington are usually either independent, i.e., licensed and regulated by the Dept Of Fin’l Institutions, or employed by a title insurance company. I have chosen to be an independent Escrow Officer my entire career.
Many well-qualified and experienced closers have worked for title companies their entire career. Typically, this was a secure job, and experienced closers were very well paid by their large corporate employers.
But given the changes in the real estate market over the past few years, title companies have been pulling back to reduce their sizable overhead … closing many or all branch offices in a county, outsourcing or off shoring work formerly done by these well-qualified closers … and unfortunately laying off these excellent people.
Some title companies have laid off escrow managers who have worked for the same company for years, perhaps their entire escrow career. Other title companies, it is rumored, have laid off all experienced closers and are "off shoring" the work out to foreign countries or "out sourcing" to third party companies. They apparently employ only a "document reviewer" to look over the documents returned from foreign offices before those documents are turned over to an outside notary for signing by the customer.
Sadly, the experienced closers who are now unemployed find it hard to stay employed in the escrow industry. This is partly due to the fact that, while they were employed at the title company, they were not required to hold an Escrow Officer license from the State. To now find a new position with an independent Escrow Agent … despite their incredible skills and experience … they must first sit for the State exam and fulfill other requirements mandated by the Washington State Department of Financial Institutions.
It stands to reason that such unemployed closers probably have developed relationships in the industry which are now "on hold" while the closer remains unemployed. No one likes to switch escrow providers when a strong and effective relationship between realtor and closer has been working well for so long.
If you are a realtor or mortgage originator whose preferred escrow closer is unemployed from a title company … and you would like to continue using that person's services for your closings … please contact me, or have them contact me. I think there are ways to keep these well-qualified people on the job, especially if they have a book of business awaiting their services!
Stan J. Pilon, Licensed Escrow Officer
stan.FirstHeritage@gmail.com
Monday, May 07, 2012
Wednesday, December 08, 2010
DFI Leaning on "Unlicensed Activity"
A quick look at the "Administrative Actions" section of the Washington Department of Financial Institutions web site shows several actions taken against out-of-state title agencies and title companies, charging them with unlicensed activity for handling escrow closings in Washington state without an Escrow Agent / Escrow Officer license ... five actions in October 2010 alone. This is good!
We are glad to see DFI actively regulating companies that do not have authority to do business in Washington, much less conduct escrow closings without a license.
Odd, then, that DFI has historically been less than eager to push for changes to State law that would require in-state title companies to be licensed as well, when acting as escrow agents. Instead, DFI's Consumer Services Department is always quick to "wash its hands" of any duty in this regard, excusing itself by saying they have no jurisdiction over title company escrow activities. While this is true, they should show some desire to change that.
The Washington State Legislature needs to take away the free pass that in-state title companies have to conduct escrow without a license. Washington consumers will be better off ... especially since consumers typically do not realize they are dealing with an escrow operation that is accountable to no one at the State regulatory level for how precious home purchase and refinance monies are being handled. Everyone wishing to serve as an escrow agent should be subject to RCW 18.44, not just the so-called "independent" escrow agents.
Just as important, the WA State Limited Practice Board should require that LPO licensees who are not licensed Escrow Officers be required to so state in their disclosures. Too many LPO-only firms (title companies) like to promote their LPO certificates as if such certificates also qualify them to be escrow officers. An LPO is strictly limited to select, prepare and complete certain legal documents for real and personal property transactions ... nothing more.
For more information on DFI regulatory actions, go to
http://www.dfi.wa.gov/cs/adminactions.htm
For more information on Limited Practice Officer regulations, go to
http://www.wsba.org/info/lpo.htm
We are glad to see DFI actively regulating companies that do not have authority to do business in Washington, much less conduct escrow closings without a license.
Odd, then, that DFI has historically been less than eager to push for changes to State law that would require in-state title companies to be licensed as well, when acting as escrow agents. Instead, DFI's Consumer Services Department is always quick to "wash its hands" of any duty in this regard, excusing itself by saying they have no jurisdiction over title company escrow activities. While this is true, they should show some desire to change that.
The Washington State Legislature needs to take away the free pass that in-state title companies have to conduct escrow without a license. Washington consumers will be better off ... especially since consumers typically do not realize they are dealing with an escrow operation that is accountable to no one at the State regulatory level for how precious home purchase and refinance monies are being handled. Everyone wishing to serve as an escrow agent should be subject to RCW 18.44, not just the so-called "independent" escrow agents.
Just as important, the WA State Limited Practice Board should require that LPO licensees who are not licensed Escrow Officers be required to so state in their disclosures. Too many LPO-only firms (title companies) like to promote their LPO certificates as if such certificates also qualify them to be escrow officers. An LPO is strictly limited to select, prepare and complete certain legal documents for real and personal property transactions ... nothing more.
For more information on DFI regulatory actions, go to
http://www.dfi.wa.gov/cs/adminactions.htm
For more information on Limited Practice Officer regulations, go to
http://www.wsba.org/info/lpo.htm
Monday, January 19, 2009
"You Get What You Pay For"
I've worked in the Escrow industry since 1980, through many different cycles in the housing and mortgage markets. Not much is new ... even in today's difficult economic climate... but I can assure you that the old adage which is the title of this post is true, even now.
In Washington, the Escrow industry exists in two groups: the escrow departments of title companies, and the licensed, so-called "independent" escrow companies.
Title companies, as you may know, are primarily insurance companies. Escrow is a related service, an extra profit center, an industry in which they are allowed to engage with limited oversight from State regulators. In legal terms, it's called being exempt.
The Office of the Insurance Commissioner ... which regulates and oversees title insurance companies ... chooses to stay largely "hands off" of title companies' escrow divisions. A representative of the OIC stated in a public meeting in September 2008 that no audits or examinations of title company escrow divisions had been conducted so far in 2008.
Licensed Escrow Agents ... so-called "independents" ... are everyone else (except title companies) that engage in providing escrow services to Washington's citizens. To do so, one must be (a) licensed (i.e., you sat for and passed a test); (b) bonded and insured; (c) submit quarterly reports to the State Department of Financial Institutions on the status of their trust accounts; and (d) submit to random examinations and audits. None of the foregoing are required of title company escrow divisions.
The general public is mostly unaware of these differences.
So what does this have to do with getting what you pay for?
In order to provide an effective and legal service to the public, licensed Escrow Agents must charge a fee that covers the cost of doing business and provides a living wage for those doing the work.
Title company escrow divisions, however, can combine the balance sheets of both their title and escrow divisions, giving them the ability to charge more ... or less ... as they see fit, on the escrow side of their business. They can also open up branch escrow offices wherever and whenever they choose, without any requirement to have those branches staffed by qualified, experienced escrow closers responsible only for that branch, as would be true of a licensed Escrow Agent.
Until the Summer of 2008, most title companies charged a flat rate for a refinance transaction and a sliding scale for a purchase. In addition, they often charged from $125 to $165 for each mortgage payoff they handled, in addition to their escrow fee (called a "reconveyance" or "trustee" fee), even if such services were usually not needed.
Licensed Escrow Agents are forbidden from charging such fees (unless a trustee was actually engaged to provide services).
In August 2008, the OIC required that title companies file their escrow rate schedules and post them on their websites.
Interestingly, the escrow rates started changing dramatically. The extra fees for payoffs have virtually disappeared, and "low ball" flat rate refinance fees are taking their place.
Of course, the consumer is often drawn to the company with the lowest price. This does not mean, however, that the experience, quality and accuracy of the low price company is of the same high level as a licensed Escrow Agent, often owner-operated, that may charge a higher fee.
Bottom line: know with whom you are dealing, not just who is charging the least. After all, a personal residence is often the largest single financial investment many people will make in their entire lives. Highly experienced, qualified escrow closers work in both environments. Choose one based upon their qualifications, not solely upon the lowest price.
You get what you pay for!
In Washington, the Escrow industry exists in two groups: the escrow departments of title companies, and the licensed, so-called "independent" escrow companies.
Title companies, as you may know, are primarily insurance companies. Escrow is a related service, an extra profit center, an industry in which they are allowed to engage with limited oversight from State regulators. In legal terms, it's called being exempt.
The Office of the Insurance Commissioner ... which regulates and oversees title insurance companies ... chooses to stay largely "hands off" of title companies' escrow divisions. A representative of the OIC stated in a public meeting in September 2008 that no audits or examinations of title company escrow divisions had been conducted so far in 2008.
Licensed Escrow Agents ... so-called "independents" ... are everyone else (except title companies) that engage in providing escrow services to Washington's citizens. To do so, one must be (a) licensed (i.e., you sat for and passed a test); (b) bonded and insured; (c) submit quarterly reports to the State Department of Financial Institutions on the status of their trust accounts; and (d) submit to random examinations and audits. None of the foregoing are required of title company escrow divisions.
The general public is mostly unaware of these differences.
So what does this have to do with getting what you pay for?
In order to provide an effective and legal service to the public, licensed Escrow Agents must charge a fee that covers the cost of doing business and provides a living wage for those doing the work.
Title company escrow divisions, however, can combine the balance sheets of both their title and escrow divisions, giving them the ability to charge more ... or less ... as they see fit, on the escrow side of their business. They can also open up branch escrow offices wherever and whenever they choose, without any requirement to have those branches staffed by qualified, experienced escrow closers responsible only for that branch, as would be true of a licensed Escrow Agent.
Until the Summer of 2008, most title companies charged a flat rate for a refinance transaction and a sliding scale for a purchase. In addition, they often charged from $125 to $165 for each mortgage payoff they handled, in addition to their escrow fee (called a "reconveyance" or "trustee" fee), even if such services were usually not needed.
Licensed Escrow Agents are forbidden from charging such fees (unless a trustee was actually engaged to provide services).
In August 2008, the OIC required that title companies file their escrow rate schedules and post them on their websites.
Interestingly, the escrow rates started changing dramatically. The extra fees for payoffs have virtually disappeared, and "low ball" flat rate refinance fees are taking their place.
Of course, the consumer is often drawn to the company with the lowest price. This does not mean, however, that the experience, quality and accuracy of the low price company is of the same high level as a licensed Escrow Agent, often owner-operated, that may charge a higher fee.
Bottom line: know with whom you are dealing, not just who is charging the least. After all, a personal residence is often the largest single financial investment many people will make in their entire lives. Highly experienced, qualified escrow closers work in both environments. Choose one based upon their qualifications, not solely upon the lowest price.
You get what you pay for!
Friday, March 09, 2007
Following Instructions
This may seem obvious, but serving as an Escrow Officer is really just about following instructions.
Specifically, an Escrow Officer can do only those things for which he or she has written instructions.
Put another way, an Escrow Officer should not do anything that is forbidden in the written instructions, nor anything that is not addressed in the written instructions.
When an Escrow Officer violates these principles, he/she can get into trouble, including incurring the wrath of one of the parties to the deal.
The basic duties for an Escrow Officer arise out of the Purchase and Sale Agreement as made between the Buyer and Seller.
Escrow Instructions are made between the Escrow Agent (on the one hand) and the Buyers and Sellers (on the other hand).
If the Purchase and Sale Agreement leaves anything open to question, the Escrow Officer's duty is to contact the parties and request written clarification (usually in the form of an addendum to the Purchase and Sale Agreement)
The new mortgage lender also deposits its written instructions with the Escrow Agent, which address the lender's requirements in the transaction.
Sometimes these different, separate sets of written instructions do not agree. What to do? The Escrow Agent must then stop further closing activity until all the parties can come to agreement and provide consistent written instructions.
Unfortunately, the age of doing things on a handshake or a "gentleman's agreement" are gone.
Specifically, an Escrow Officer can do only those things for which he or she has written instructions.
Put another way, an Escrow Officer should not do anything that is forbidden in the written instructions, nor anything that is not addressed in the written instructions.
When an Escrow Officer violates these principles, he/she can get into trouble, including incurring the wrath of one of the parties to the deal.
The basic duties for an Escrow Officer arise out of the Purchase and Sale Agreement as made between the Buyer and Seller.
Escrow Instructions are made between the Escrow Agent (on the one hand) and the Buyers and Sellers (on the other hand).
If the Purchase and Sale Agreement leaves anything open to question, the Escrow Officer's duty is to contact the parties and request written clarification (usually in the form of an addendum to the Purchase and Sale Agreement)
The new mortgage lender also deposits its written instructions with the Escrow Agent, which address the lender's requirements in the transaction.
Sometimes these different, separate sets of written instructions do not agree. What to do? The Escrow Agent must then stop further closing activity until all the parties can come to agreement and provide consistent written instructions.
Unfortunately, the age of doing things on a handshake or a "gentleman's agreement" are gone.
Friday, February 09, 2007
Simultaneous Closings
Occasionally I am asked if two transactions can be closed on the same day ... where each transaction is being handled by different Escrow Agents.
The short answer is "no," and here's why. It all has to do with the sequence of events that occurs on the morning of closing.
Signing of all documents, including loan documents by the Buyer/Borrower, will have occurred (hopefully), a few days prior to closing (for both transactions). On the morning of closing, the new lender calls the Escrow Officer to confirm it is ready to close, i.e., new lender will send a wire of loan proceeds to the Escrow Agent, and the Escrow Agent is authorized to have the documents recorded at the County courthouse.
Typically, the new lender has a cutoff by which it will give this authorization and wire it's funds. Often it is prior to Noon or 1pm.
This same process must also occur for the new lender on the second transaction.
Unfortunately, no one knows how long it will take for the documents on the first transaction to be recorded at the courthouse. And until the documents for the first transaction are actually recorded, the first Escrow Agent cannot release the seller's proceeds to the second Escrow Agent.
The second Escrow Agent, of course, cannot release the documents to the courthouse until the Buyer's funds have been received (the "Buyer" here being the "Seller" on the first transaction).
Furthermore, there is a distinct possibility that the first transaction will not be recorded until mid to later afternoon. By that time, the Federal Reserve will be closed for the day, so the Seller's proceeds cannot be wired to the second Escrow Agent until the next morning. Not to mention the the new lender on the second transaction probably needed a definite answer by Noon or 1pm as to whether or not its transaction could close that same day.
This, of course, will prevent the second transaction from closing simultaneously on the same day as the first transaction.
What to do?!
There are two ways to handle this successfully ... and predictably.
1. The parties can appoint the same Escrow Agent to handle both transactions. This way, when the first lender has authorized closing and recording, and the second lender does so also, the Escrow Agent can send both transactions to the courthouse at the same time. Since the Seller's funds from the first transaction do not have to be wired out ... but rather simply applied to the second transaction in the same escrow office ... there is no delay in closing the second transaction.
2. If the parties cannot agree to appoint the same Escrow Agent on both transactions, it is essential that the two closing dates be at least one day apart. This will allow time on the first closing day for the recording and wiring to be completed, so that the second transaction can proceed the next morning.
Of course, option #2 works best if possession is at least one or more days after closing. If possession is "on closing," the Seller on the first transaction would have to vacate the property before they were closed on their new purchase, thus having to stay overnight elsewhere for at least a day or two.
Always consult with the Escrow Agent(s) when negotiating two back-to-back closings, so all of the possible issues are addressed well before the closing date.
The short answer is "no," and here's why. It all has to do with the sequence of events that occurs on the morning of closing.
Signing of all documents, including loan documents by the Buyer/Borrower, will have occurred (hopefully), a few days prior to closing (for both transactions). On the morning of closing, the new lender calls the Escrow Officer to confirm it is ready to close, i.e., new lender will send a wire of loan proceeds to the Escrow Agent, and the Escrow Agent is authorized to have the documents recorded at the County courthouse.
Typically, the new lender has a cutoff by which it will give this authorization and wire it's funds. Often it is prior to Noon or 1pm.
This same process must also occur for the new lender on the second transaction.
Unfortunately, no one knows how long it will take for the documents on the first transaction to be recorded at the courthouse. And until the documents for the first transaction are actually recorded, the first Escrow Agent cannot release the seller's proceeds to the second Escrow Agent.
The second Escrow Agent, of course, cannot release the documents to the courthouse until the Buyer's funds have been received (the "Buyer" here being the "Seller" on the first transaction).
Furthermore, there is a distinct possibility that the first transaction will not be recorded until mid to later afternoon. By that time, the Federal Reserve will be closed for the day, so the Seller's proceeds cannot be wired to the second Escrow Agent until the next morning. Not to mention the the new lender on the second transaction probably needed a definite answer by Noon or 1pm as to whether or not its transaction could close that same day.
This, of course, will prevent the second transaction from closing simultaneously on the same day as the first transaction.
What to do?!
There are two ways to handle this successfully ... and predictably.
1. The parties can appoint the same Escrow Agent to handle both transactions. This way, when the first lender has authorized closing and recording, and the second lender does so also, the Escrow Agent can send both transactions to the courthouse at the same time. Since the Seller's funds from the first transaction do not have to be wired out ... but rather simply applied to the second transaction in the same escrow office ... there is no delay in closing the second transaction.
2. If the parties cannot agree to appoint the same Escrow Agent on both transactions, it is essential that the two closing dates be at least one day apart. This will allow time on the first closing day for the recording and wiring to be completed, so that the second transaction can proceed the next morning.
Of course, option #2 works best if possession is at least one or more days after closing. If possession is "on closing," the Seller on the first transaction would have to vacate the property before they were closed on their new purchase, thus having to stay overnight elsewhere for at least a day or two.
Always consult with the Escrow Agent(s) when negotiating two back-to-back closings, so all of the possible issues are addressed well before the closing date.
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