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