Do you know where to find info on septic systems and your responsibilities? August 7, 2008
A client of mine is planning on selling a property soon and he’s trying to get his proverbial “ducks in a row” before going on market. He asked me about what his responsibilities are with regard to his septic system and he also wanted to know if he needed to do an inspection or pumping of the system prior to selling. If you are not familiar with this process either as a buyer or seller, here is a great website with details about septic systems for you to learn about. It’s specific to King County so if you live outside this area you’ll want to see if your own county has a similar website with info for you.
If you just want to learn more about septic systems (also called onsite sewage systems) and how to use them properly and care for them you can read through this information, also from King County.
Stewart Title in Everett on fire June 25, 2008
I just received a call from Mark Perez who works at Stewart Title in King County telling me that Northwest Cable News is showing film footage of a fire in progress at Stewart Title’s Snohomish County main office in Everett.
If you recall it was less than a year ago that Stewart Title Everett received a two million dollar fine by the state Insurance Commissioner for violating provisions of state law governing title insurance companies.
Update: Here are some links to follow up stories on the fire:
Seattle Times says ATF is investigating
KIRO TV reports that ATF says the fire does not look suspicious. video
Realtors and mortgage brokers are warned that they will be prosecuted for RECEIVING title insurance company payola June 6, 2008
A “Risk Management” Alert bulletin was distributed to real estate brokers in Washington State this week by the Washington Assoc of Realtors in anticipation of yet another new state law, SB 6847 that will go into effect on June 12th. Here is the bulletin:
June 3, 2008
SUBJECT: RISK MANAGEMENT ALERT To Share at This Week’s Office Meetings
THIS WARNING APPLIES TO ALL BROKERS AND LICENSEES, BOTH COMMERCIAL AND RESIDENTIAL, REGARDLESS OF WHETHER BROKER HAS A FINANCIAL INTEREST IN A TITLE COMPANY.
Effective June 12th, Washington Law provides new legal authority for state regulators to take enforcement action against real estate agents and brokers who receive or accept inducements from title insurance companies unless those inducements are authorized by state agency administrative rules. To date, state agency administrative rules have not been adopted and therefore, for the time being, the only safe practice is to decline receipt of any offer of anything of value from any title company, agent or employee.
The law was adopted in response to investigations that disclosed title insurance industry-wide violations of limits on paying inducements. The concept of this law is not new but under this new law, title insurance companies will be prosecuted for paying the inducements AND AGENTS AND BROKERS WILL BE PROSECUTED FOR RECEIVING THE INDUCEMENTS. While residential agents have always been prohibited from receiving anything of value from a title company under RESPA, a federal law, RESPA has not often applied in the context of a commercial transaction. This new state law draws no distinctions between commercial and residential practices and creates a RESPA-like prohibition against ANY agent or broker accepting ANYTHING of value from a title insurance company, agent or employee.
In addition, Brokers/Owners of real estate companies who also have a financial interest in a title company, will be prohibited from paying inducements to their own agents for the referral of business to broker’s title insurance company.
The Washington REALTORS® will be meeting with representatives of the Real Estate Program of the Department of licensing later this week to seek additional clarifications on how the new law will be implemented.
In the meantime, agents and brokers should be aware that “inducements ” to real estate agents from Brokers who have financial interests in a title company may include items such as:
Reducing and/or paying of Desk fees for referring/directing title insurance business
Reducing and/or paying of Advertising for referring/directing title insurance business
Reducing and/or paying for reimbursements or expenses for referring/directing title insurance business
Waiving, reducing and/or directing payment of any other expenses or reimbursement for referring /directing title insurance businessIn addition ALL REAL ESTATE LICENSEES should be aware there are many ways they can be receivers of potential “Things of Value” from title companies. Receipt of any of these items is appropriate if agent pays value for the item but would possibly constitute a violation of the new law if agent receives the item, from a title insurance company or agent, without payment.
Shared advertisements in which agent does not pay a pro portional share of the costs based on the amount of ad space used
Payment, in whole or in part, for clock hours tuition or other related expenses
Title cancellation fees, owing from agent, that remain unpaid
Open house refreshments
Hand Outs that include anything other than the property’s last deed of record, last deed of Trust of record, a plat map and tax information. All other handouts must be purchased by agent.
Farming packages identifying names and addresses of multiple real property owners for use by an agent in soliciting business
Copies of CC&Rs
Comparable sales information
Entertainment
Gifts
Tickets to events or shows
Sponsorship of association, company or agent events
Any of the above that the title insurance company provided for a fee that has not been paid
Will fear of prosecution at the state licensing level motivate real estate agents, real estate brokers, mortgage loan originators and mortgage brokers to stop asking for payola? Clearly we have several thousand licensees in Washington State who have never lived in a world where title reps do not come loaded with a basket full of some kind of drug. Pick your poison from the list above. Accepting marketing subsidies can become addictive. Some title reps are so young that they have never known a world where selling skills were actually used in the title insurance industry.
Now I KNOW we’re going to get a slew of Realtors commenting here who will say “I’ve never asked for, offered or received anything in violation of RESPA.” That’s okay. We know you have to say that on a public blog.
The real question is, what will the title companies do with all the money they’ll be saving? Hmmm. I can think of SEVERAL things.
I predict that this new law will curtail a certain percentage of kickbacks, however, the rest of the kickbacks will move deeper underground. For example, a real estate broker owner giving preferential treatment to a top producing agent for referral of services to companies owned by his or her broker.
From the perspective of a RESPA instructor, I recommend real estate agents and mortgage folks spread your business around. By continuing to send your business to ONLY one title and escrow company, you’re drawing a target on your chest. If I were a state regulator, you’re who I’d audit first. ESPECIALLY if all that title and escrow business is going to a title and escrow company owned by your broker.
For consumers, if your real estate agent or mortgage loan originator is directing your title insurance and escrow business to a specific firm, ask, “can you please tell me what you are receiving in exchange for referring my business to that company?” The answer should be similar to, “great service and low rates.”
Just as the entire mortgage and real estate industries are reeling from the mortgage-brokers-and-Realtors-gone-wild days, the title insurance and escrow firms are also hitting control-alt-delete with the payola. It’s headed back underground, where it use to be, to a more quiet and respectable place, where only the unnamed will go to pay and collect.
Title and Escrow - Who Chooses? April 27, 2008
In this post I will address the topic from a practical standpoint, in chronological order, based on ”Common Practice”. This post is written from the standpoint of “common practice” in the Seattle area, where Title and Escrow are two separate functions, and not combined as they are in “settlement” vs. “escrow” areas. Areas that have “a settlement or ‘event’ closing”, operate differently. After reading this, you will likely feel that something should change. So posting on this topic is a great way to influence change, a side benefit to blogging in “transparent” fashion.
Nothing changes until its weaknesses are illuminated by discussion…so here goes.
1) The first thing an owner does (or the listing agent does on behalf of the owner) is contact a Title Company. Most often, this is done BEFORE the property is listed for sale.
Most Title companies offer three levels of information/service:
a ) a “listing packet”
b) “Preliminary Title”
c) A full Title Insurance Policy
Often an agent will order a “listing packet” upon first getting a request to visit an owner at their home to discuss the property being listed for sale. This level of information provides a basic legal description, a plat map, and some basic and general info regarding the property. Some companies provide sale comps, but most experienced agents don’t rely on the Title Company for “comps” and do their own. Personally I tell a Title Company not to waste their time or the paper producing comps for me. I never find them to be useful, or as useful as the ones I do myself.
While in theory “the seller” orders Title as “common practice”, and By Law the Buyer is supposed to choose the Title Company (see RESPA below), most often the agent has already been in contact with a Title Company before they even meet the seller.
2) “Preliminary Title” is usually ordered by the agent as soon as they know that “they have the listing”. Sometimes I do this as a first step, if I know the owners well enough to know that I will be listing the property before I go to the first meeting to discuss getting the property ready for market. That gives me more info up front than the “listing packet” and saves the Title Company some time, and possibly a few trees, if we get “hard copies” or print out the info.
When an agent lists a property, part of the intitial input into the mls system is a field question that asks “Has Preliminary Title been ordered?” Then there is a drop down box where you enter “Yes” or “No”. The presumption is that the answer should be “YES” and often the Title Order # is included in the Agent Remarks section “Title Company is X order #X”. To comply with RESPA, the buyer is supposed to choose the Title company. So possibly this provision in the mls listing input should be eliminated. You be the judge. For now, that’s how it is.
In order to write an offer on a property, the agent for the buyer needs to access the legal description. As soon as there is “mutual acceptance” of the contract, the lender needs to access the Title Order by company and Title Order #. So without regard to the Insurance aspects of Title Insurance, the process of involving a specific Title Company happens long before there is a need to actually insure the property with regard to Title Issues. At time of offer, the buyer has the option to choose Title and Escrow as part of the offer and is NOT obligated by law or contract to use the one who provided the owner and listing agent with services to date. Still common practice does not follow that thinking…or at least hasn’t do date. Maybe the people reading ths post will change that in the future.
3) Title Insurance Policy - Now we get into who pays and who chooses. Up to this point, no one pays. If the property never gets “signed around” and escrow is never opened, the Title Company has provided all of the services for free. The title Company up to this point, provided these FREE services to the listing agent. The balance is that the agent most often uses the same Title Company all of the time or most of the time, and so there is an offset of paid for services against the free services. If owners ordered and paid for the services up to this point (vs. the agent), there would likely be a cost for the first stages that are currently offered free of charge if the house never sells.
Here in the Seattle Area we have OWNER’S Title and LENDER’S Title. Owner’s Title Insurance is the manner in which an owner conveys “clear title” to the buyer. The cost is based on the Sale Price and is paid for by the seller. Lender’s Title is all about the buyer. If it is a cash buyer, there is no Lender’s Title. If the purchase is financed, then the buyer pays for that portion of the Title Insurance that insures the Lender and is based on the loan amount vs. the Sale Price.
RESPA - Basically RESPA provides that “the owner” gets to choose Title. In this post I refer to “the owner” as the person who owns the property prior to closing. Common pactice here is that the owner at time of listing the property “orders title”, at least Preliminary Title. RESPA (Real Estate Settlement and Procedures Act) “entitles the homeowner to choose a title insurance company when purchasing or refinancing…” and gives that right to the BUYER as “owner” and not the seller as owner. In fact any seller who mandates the Title Company to the buyer is subject to a penalty of 3 times the cost of the Title Insurance. This makes perfect sense in settlement States, but is a bit odd in in escrow States. But it is what it is. Back to common practice.
It would seem that the seller should CHOOSE and pay for Owner’s Title and the Buyer should CHOOSE and pay for Lender’s Title, simply due to the fact that the owner and listing agent need to review title information long before the buyer is a known entity. Practical application and the law do not seem to be in sync here. Most often the ACTUAL title policy is an automatic via the company that offered Preliminary Title. To “perfect” the system, there should be a separate administrative charge for the Listing Packet and Preliminary Title that is paid by the seller, and a Buyer Election to choose the Title Insuror, without regard to who provided the a) and b) services. My opinion, of course.
Up to this point, the agent needs to find the things the owner doesn’t often know about the property. Or the agent needs to prove that what the owner BELIEVES is so, is accurate, which is not often the case. We as listing agents are using Title Companies to ascertain liens, easements, encroachments, etc.. We don’t want to find out that the owner is incorrect AFTER the property is in escrow. Often the owner thinks they own the driveway, when they do not. By being in contact with the Title Company in advance of listing the property, we often find out that both owners own the driveway. Sometimes and often four feet each. In my most recent study of a soon to be listed property, the ownership of the driveway is 4 1/2 feet vs. 3 1/2 feet…odd but true. Most owners do not know these things, or worse yet are WRONG about these things. So in my book, misrepresenting the property (IMNSHO) is worse than worrying about waiting for the buyer to be a known factor, before consulting with a Title company.
Still it is the buyer’s right, under RESPA to choose a different Title Company later in the process, so the common practice of Preliminary Title moving straight to an ACTUAL POLICY, should not happen as it does, without the buyer’s direct election of Title Company. From my standpoint this is MORE important in areas where the Title Company is also the Closing Agent…so let’s move on to “choosing escrow”, so you can see why I feel this way.
4) CHOOSING AN ESCROW COMPANY/CLOSING AGENT. While the Listing Agent may have in the agent remarks field “Title Company X Order # X and Escrow TO BE X or Y”, the escrow company is not utilized or chosen (most times) in advance of the buyer’s offer. Only Title services are needed prior to offer (with some exceptions).
Most reasonable people agree with me :) that Title should be ordered by the Seller and Escrow should be chosen by the Buyer.
This post is probably going to open a big can of worms, but in the interest of Transparency, the resultant fallout is of value. Most buyers and sellers get “whooshed” through the whole and very important process of Title and Escrow services. So talking about it is important, even if we all don’t agree.
It is important to note that NEVER in the 18 years I’ve been in this business have I seen anyone choosing title and escrow services based on cost (or home inspection, or anything important to the process). Given the relatively minor differences in cost, the small amount you save is not worth the anguish you might later face by having chosen based on cost vs. competency.
When there are five offers on a property, well making a big deal of buyer choosing escrow may not be appropriate. No one wants to lose the house fighting over who is handling the escrow. But often, even in multiple offer situations, the listing agent will understand that the buyr should chooses escrow, and Title Company too if they want to. The problem with the RESPA rule is that if the buyer makes a big stink over who chooses the Title Company in a multiple offer situation at time of offer, they may not get the house. No one can prove that they didn’t get the house because of the battle over Title Company. So for all practical purposes, seller chooses “all services” when there are multiple offers often wins, because of market conditions.
But with the market changing, it is important to highlight that common practice over who chooses should CHANGE when there is only one buyer in the room, and the “common practice” of a strong Seller’s Market should not continue into a balanced or buyer’s market. That is one of the reasons I am writing this post at this time. My biggest criticism of “common practice” is that agents do not make enough effort to swing it back and forth to match “market conditions”.
Common Practice should reflect the actual needs of the buyer and the seller and change as market conditions dictate, and not simply be “the way we have always done it”.
Buyer’s question at signing March 26, 2008
A recent buyer asked us at signing (a day or two prior to closing):
“I’ve noticed that the fees charged by my loan officer are about $1,600 more than my Good Faith Estimate. I recall only being charged 1% loan origination. Is there any explanation for this?”
What are the re-disclosure laws (both state and/or Federal)? Obviously, this buyer was a bit under pressure and did not want to create waves to delay the purchase.
Does it matter who you list with, who you close with or who your loan officer is? March 8, 2008
Being in the escrow business is really fascinating. You see lots of things. You hear lots of things. You get to observe what is efficient and what slows down transactions.
Escrow can be confusing too. We really serve two masters: those that are our clients (the principals such as the seller or buyer or borrower) and those that are our customers: agents and loan officers who suggest and refer work to us or any other service provider. It’s also something to experience such a large transaction “quality control” chasm between different agents working for different brokerages even within a major brokerage franchise network.
But this post really is about how agents and consumers decide what you decide.
1) For example, an interesting thing occured. In the mail, I received a post card from Greg Perry of John L Scott marketing a home not far from my place. It’s not strange that I receive things in the mail from Realtors, but that the owner of the home is a broker from another company—why did they hire another agent to list the house? I know this owner because our kids play together and we’ve closed transactions for him. It is a fascinating move.
2) We have had several transactions with repeat clients who have used a different service provider (agent or loan officer) the second or third time around. Why are they doing this?
3) In escrow we work in high collaboration with just about every title company. Obviously, we do not have primary contact with the sales staff (title reps) but rather the attorneys, title officers and back office staff that are largely the engine under the title insurance hood.
One of the things that I have always wondered and one question that my wife actually raised while we discussed business matters is the following: how do agents choose one title company over another since the perception of agents in the market is that title insurance companies (heck, even escrow firms) all do the same thing and the end result of issuing a title policy or a closed transaction is the same result? In other words, agents have a tendency to say they receive good service, but what is that service they receive? Agents have very little if no contact with the title company other than the with the title rep. How are the title companies differentiating themselves especially when many are using just another name plate but are in fact a subsidiary of a large national title company.
Consumers have no idea how to differentiate Pacific Northwest Title (First American) from First American Title. Or, comparing Land America Title from Commonwealth or Rainier Title (Land America companies). It is kind of like comparing the Nissan Quest with the Mercury Villager. Both are virtually the same vehicle. Consumers rely upon their agent to differentiate for them. How do the agents differentiate between service providers for their customer?
4) Along those same lines, competition is cut-throat between service providers such as escrow and title, especially in a market where sales volumes are significantly lower than over the past four years. Agents are very fierce in fighting for their respetive loan officer or title or escrow company if involved in a sale. Tradition has it’s place, but what is the compelling proposition of one service provider or closing agent over another?
5) What is more important to an agent when suggesting a loan officer: closing the transaction, lowest rates and fees for their customer or client, or a combination? For example, one of the loan officers we work with does average volume but gives phenominal service to the client, loan docs are usually ready days in advance and nothing has ever not closed due to a problem created by this LO. On the other hand, we work with LO’s that due boat loads of loans and there are the occasional problems with service to their clients or other issues.
Life in escrow: When we compete with American Idol. March 4, 2008
There is only so much escrow can do when escrow receives loan docs at 5pm and the borrower must sign because an interest rate lock is about to expire and the rescission period puts their back against the wall, forcing them to sign the very same day (evening). Then the borrower (s), strangely unaware of the urgency, indicates:
1. Can you come to our house between 7:00-7:30 because American Idol is on at 8pm (like tonight, cough-cough) and we can’t miss it. Or, how about after the program is over?
or,
2. I drop Billy off at Basketball at 6:30 and pick him up at 7:30, so I won’t be home until 8:15 pm. Will 8:30 pm work for you? Oh, my spouse needs to sign as well? He does not get off his shift until midnight. Is that a problem?
Will these transactions close on time? If you do what Ardell suggests in Step #2, it is a sure thing..
I’m beginning to muster up the courage to ask management for new business hours: M-F 8-5pm; quick hour break for a run to Panda Express, sprint any last minute disbursed loan Payoff’s to the UPS terminal blocks from our office to make it on an airplane to wherever, do banking before the bank closes at 6pm; hustle back to the office, quickly re-check e-mail for more “last minute” loan docs promised days earlier, and then re-open from 6pm until midnight for signings from Bellingham to Olympia to Ephrata. Sat. and Sun. leave wide open for signings too.
Escrow Signings: your place or ours. February 8, 2008
This place, while “very rough”, was not the worst. We’ve been to some very remote and isolated areas. While escrow firms go way out of their way to assist agents and loan officers in closing their transcations for our mutual clients, you can see why courtesy signings outside of normal business hours or far distances are not free.
We’ve signed clients from one extreme to the other: in jail at 9pm at night a couple days before Christmas when no one should be working, to the Columbia Basin dust bowl of Ephrata in eastern Washington; the Columbia Tower Club in downtown Seattle to everyone’s second office, Starbucks!
Major Proposed Changes for Residential Closings in 2008 December 12, 2007
Alternative sexier titles to this post are: “Your Escrow Officer is a NARC” or “No More Quicky Closings” or how about “The Escrow Hills have 
Eyes”. There are some major changes brewing with how escrow will be practicing their business in 2008. Escrow companies may become “undercover” fraud agents for the lender under the current draft of the Uniform General Closing Instructions.
Here are some of the changes proposed in the current draft:
If a lender has not provided escrow documents two days before the scheduled signing appointment, the lender must notify all parties “that the scheduled Signing has been postponed to a date and time at least two Business Days after receipt of required information from Lender”.
The Settlement Agent (ie the escrow company) “must obtain Lender’s written approval of an estimated Settlement Statement at least one Business Day before Signing”.
“If Lender has not provided Borrower with copies of the Loan Documents and Lender’s contact information at least one Business Day before the scheduled Signing, then the Signing must be postponed until this condition is met.”
I think it’s great to provide escrow with plenty of time to review loan documents. And for the borrower to have a chance to review them as well. This puts the burden of providing loan documents to the borrower before their escrow appointment and this may delay or prevent “rush closings”. Do borrowers really want to automatically receive the entire set of loan documents before their closing appointment?
If Settlement Agent uses a Signing Agent, Settlement Agent is responsible for selecting and directing Signing Agent and is responsible for the actions of any Signing Agent utilized in this transaction. Settlement Agent shall not designate as a Signing Agent Lender, any real estate agent or broker involved in the transaction, or Mortgage Broker, or any of their employees.
Say good bye to signings using a notary not employed by the Escrow Company. What happens if the signing is in another country? How can the Escrow Company (Settlement Agent) be held responsible for a notary in Argentina?
Are you sitting down yet? You’ll find this under the Fraud Prevention section:
“If a Lender employee, Mortgage Broker employee, or real estate brokerage employee or agent attends the Signing, Settlement Agent shall not permit such a party to overtly pressure Borrower at Signing or encourage Borrower to Sign prior to reading the Loan Documents, act as interpreter, or in any way obstruct the ability of Settlement Agent or Signing Agent to perform its duties. It must not be suggested by any party that Borrower use the rescission period to read Loan Documents or to address questions or objections raised at Signing. In the event any such conduct set out in this paragraph occurs, Settlement Agent shall stop the Signing and contact Lender’s designated ‘Fraud Prevention Contact”.
Will this encourage Loan Originators and Real Estate agents to not attend signings with their clients?
Escrow must “as soon as reasonably possible of discovery of what it suspects may be unfair, deceptive, misleading or unlawful behavior by any Lender or Mortgage Broker employee in connection with the Loan. Lender indemnifies Settlement Agent and Signing Agent against any legal claims brought by a Lender employee or Mortgage Broker employee who is the subject of any suspicious activity report given in good faith”.
Many loans seem unfair and probably a significant amount are. When I was wearing my escrow hat, we would often think the lender was unfair or perhaps charging too much. Now that I’ve walked in “mortgage shoes”, I know that I was judging without knowing the entire story, programs, what the rate was on the day the borrower locked…etc.
“Any material fact that may…have an impact on Lender’s decision to make the Loan. A material fact includes but is not limited to, any significant information on changes in the value or title of the Property, financial condition of Borrower, changes in marital status or the legal status of Borrower, changes to the sales contract (if a purchase), changes to the financing, Borrower or Seller bankruptcy, enforcement of creditor’s rights against Borrower or Seller, or any other indication of suspicious activity.”
Knowledge of potential or actual fraud, misrepresentations, falsehoods…including “any person involved in the transaction, including but not limited to Borrower, Seller, real estate broker, builder, Mortgage Broker, Title Insurer, appraiser, Signing Agent or Settlement Agent may have made a material misstatement or committed a falsehood that might affect this transaction.”
Whew…I think our escrow fees just went up!
This draft has been proposed to Mortgage Bankers Association (MBA), American, Land Title Association (ALTA) and the American Escrow Association (AEA). This proposal is open for comments until January 31, 2008.
There are many good aspects to this proposal. Is it fair to make escrow (who is suppose to be a neutral third party) “big brother” and placing this responsibility and possible liability on their shoulders?
Common myths & misconceptions of Escrow. October 22, 2007
Please do not construe this as legal advice, it is not. The sampling below is general in nature and is referencing common escrow misconceptions we see in the course of conducting business.
Here are a few to get started.
1) Escrow firms produce and verify the validity of Legal Descriptions.
- Incorrect. In a sale it is the Seller’s responsibility to correctly identify the property that is being sold. The Buyer should verify that the legal description matches the property that they intend to purchase.
2) Escrow firms are bound by Northwest Multiple Listing Rules.
- No. Escrow is bound by the Escrow Agent Registration Act of Washington. Some managing real estate brokers erroneously believe otherwise. The Legislature also has determined that escrow officers are subject to the Consumer Protection Act.
3) Escrow firms never have conflicts of interest or problematic transactional issues.
- Untrue. Escrow firms commonly run into potential conflicts of interest, and problematic issues. The idea is to reduce the exposure of potential conflicts and issues as much as possible via a variety of means. For example, escrow commonly discloses those problems to the principals in the transaction so they can consult appropriate professionals and give escrow additional instructions on how to proceed.
4) Independent Escrow firms are sued more often than attorney-owned escrow firms.
- No. Ironically, Attorneys who own escrow firms have earned that privilege. (Source: Fred Phillips- Attorney, LPO Seminars).
5) Limited Practice Officers at escrow firms are tested & licensed by the Washington State Dept. of Licensing.
- No. The LPO exam is administered by the Washington State Bar Association twice a year. The pass rate has been under 30 % for quite a while, but has recently improved. LPOs are regulated by the Washington State Bar Association and Washington State Supreme Court. Independent Escrow Companies are regulated by the Washington State Dept. of Financial Institutions.
6) Escrow staff work at all hours of the day and evening.
- Traditionally, no. Most are open from 9-5pm. From a practical standpoint, ownership does work at all times (speaking only for our company). Escrow firms have banking hours for a reason. Escrow firms are closed when the there are Federal holidays and when the Federal Reserve is closed. The receipt of lender wires occurs up to specific times in a business day, typically until about 2 pm. This may depend upon the trust account banking policy the escrow firm has with its own bank.
7) Loan officers and real estate agents are principals in the escrow transaction.
- Incorrect. The buyer(s) and seller(s) are the principals and escrow can only be instructed by these parties. Loan officers and agents cannot instruct escrow or influence the escrow transaction in any manner.
- Example: a loan officer who calls escrow to request proceeds check mailed to their customer instead of being wired to the customer’s bank as the client previously instructed escrow in writing.
- Example: a real estate agent/Broker instructing escrow to refund an earnest money check to a borrower (buyer) without a rescission agreement.
Escrow staff can produce, prepare and/or instruct their clients (buyer or seller) on drafting purchase & sale addenda for common things such as extending a closing date.
- No. This is tantamount to practicing law and may be a conflict of interest. Only a licensed real estate agent, attorney or principal parties can draft addenda.
9) Loan documents are almost always perfect when submitted to escrow.
- No. Loan documents frequently and frustratingly have errors, such as incorrect fees, incorrect name spellings, incorrect vesting, among other errors.
- Loan documents take time to prepare after receiving them from the lender, particularly if docs are re-drawn several times. This is a reason many escrow firms refuse to set up signing appointments with clients (who sometimes have to take off work early or are inconvenienced in other ways) until the docs are at escrow, prepared and confirmed correct with the borrower, mortgage broker and real estate agent.
10) Escrow staff have no deadlines.
- Emphatically incorrect. Escrow staff are looking at the clock all day long. In our State, disbursing funds cannot take place until confirmation that the documents have been recorded.
- Escrow staff must get loan payoffs to Fed Ex or UPS on time. This is a prime reason our company is located just blocks away from the major UPS terminal for Snohomish Co. It allows just that much more flexibility in TIME. Time is precious in the escrow business.
- There are many other time-sensitive tasks as well.
11) Once escrow has been opened and is progressing towards closing, Escrow cannot refuse to close a transaction.
- Incorrect, and it does happen.
