DFPI Escrow Advisory Committee Meeting Minutes

title

struction under the escrow regulation. Garcia commented that the problem to say no to CDA is to give a competitive advantage to DRE broker-controlled escrow companies or title-controlled escrow companies that will say yes. Liang stated the Department observed in recent years real estate brokers used escrow agents as Page 3 of 6 bookkeeper to manage their earned commissions and use those funds to pay their personal and business expenses such as to pay referral fees to a different broker, paying college tuitions, personal credit card payment, car payment, child support, alimony, etc. Liang remin

settlement funds

Licensees Page 2 of 6 should also be aware it may be outside of the scope of escrow to provide bookkeeping and bill payment services to the seller for their funds in the trust account. Larry Black questioned if a licensee holds rent or security deposit post-closing, would the funds being held be considered a holding escrow. Liang stated whether any remaining funds in the escrow would be considered as turning into holding escrow requires a review on a case-by-case basis. Typically, post-closing funds being held for repair, termite works, etc. are not considered as holding escrow. If the license

consumer protection

to submit an annual audit report. It is not uncommon to see a licensee rescind their request to surrender a license. Garcia questioned how such requirement will benefit consumer if a licensee does not have the funds to meet its financial requirements or to engage a CPA to do an annual audit. Liang stated maintaining financial requirements and submitting an annual audit mitigate risks to consumer funds. Those requirements may be waived under some circumstances such as when the Department is placing the company under conservatorship or receivership. In those cases, an annual audit report may no

wire fraud

ion where the sellers were a traveling couple. The licensee communicated with the sellers verbally and electronically. The licensee had the seller’s signed and notarized wire instructions. The transaction was recorded, and proceeds were wired. The licensee also mailed the final closing statement to the sellers. The wire was rejected by the receiving bank because the beneficiaries on the wire were different from the name of the account holder. The vacant landowner received the final closing statement and contacted the licensee that they had no knowledge of this sale. It appears a fraudster impe

escrow instructions

he proceeds. Cassel suggested licensees remain neutral and ask the seller(s) to get legal advice as there may be tax consequences. Liang stated if a licensee follows the instructions from the principals to disburse proceeds to seller(s) of the transaction, there is no apparent escrow violation. Licensees are encouraged to disburse proceeds promptly to avoid proceeds being turned into a holding escrow. Licensees Page 2 of 6 should also be aware it may be outside of the scope of escrow to provide bookkeeping and bill payment services to the seller for their funds in the trust account. Larry Blac