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Name: Nancy Steffen
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Elusive Value: Title and Escrow

November 16th, 2009 at 10:15 pm

The issue of refunding earnest money deposit has always been a pet peeve of mine as well. I had a few discussions with the Real Estate Agency (who regulates escrow in Oregon) and this is what they said:
The PSA is an agreement between the parties and as such is not sufficient to instruct escrow to release the deposit. Escrow needs separate, specific ,written and dated instructions.

Last legislative session they passed a new law which says that escrow can now accept a Termination Agreement or another addendum, provided it is signed by both parties and instructs escrow what to do with the money. It also says that the addendum may not be written concurrently with the PSA.

Elusive Value: Title and Escrow

November 16th, 2009 at 5:02 am

My point, David, was that in my experience escrow repairs their errors and makes the injured party whole again. Missing taxes or a lien or catching a short pay off usually does not cost the party anything that they did not already owe. I certainly agree that it is inconvenient.

Everyone in a real estate transaction is human and can make errors. Knowledge, communication, collaboration and working as a team still works best when trying to close a transactin with any kind of issues, or one without any issues for that matter.

Elusive Value: Title and Escrow

November 15th, 2009 at 9:14 pm

Real deal here:

The seller owns several pieces of real estate and inadvertantly furnishes escrow with the wrong loan number for the pay off. The pay off gets ordered and no one catches that it is on the wrong property. (including the Sellers who initial the pay off demand)

Oops….wrong loan paid off. Just yuk! Sometimes it’s easier to fix than others but a bad thing nonetheless.

Or my favorite:

A Countrywide short sale. Escrow does everything right. The HUDS are approved and the escrow is closed in exact accordance with Countrywide’s instructions. But oops….the short sale guy at Countrywide forgets that he has not gotten back the signed agreement for the seller to pay the deficiency. The Seller’s attorney and the Seller (who have been negotiating the short sale long before escrow was opened) say that they notified Countrywide that the seller would not agree to sign the agreement.

Now Countrywide returns the payoff and reinstates the loan. Now we have two loans on the property (one in foreclosure), a seller who has moved back to Mexico and a new buyer in the house.
Some days you just can’t win.

Elusive Value: Title and Escrow

November 15th, 2009 at 7:34 pm

Buyers and Sellers are the principles in the escrow. I simply can’t understand an agent who will not allow escrow to speak with the Buyers and Sellers. When escrow needs a SS# from a seller, does the agent really want (or do the Buyers and Sellers really want another person to have their personal information) to be in that line of communication? The information which needs to be communicated is complex and oftentimes, time critical. Not allowing escrow to talk to your clients is like taking grandma to the doctor but not letting him listen to her heart or examine her.

My experience has always been that if escrow makes an error (and I’m speaking of title company related escrow) they step up and do the right thing. I’d be interested to know how escrow cost David tens of thousands of dollars. Escrow is pretty regulated and there are many options if they are really negligent. Court is only one of them.

The misunderstanding I have seen most often is where title misses some taxes, or a sewer lien and, after protecting our insured (the buyer and lender) we go after the seller whose owed the taxes or lein in the first place. A title company loss is done for any penalty or interest due as a result of overlooking the taxes or lien. Or when a seller makes another draw on a line of credit and the pay off is short or the seller bounces a check for the last payment credited on their loan. Again the title company protects their insured but can and does go after the seller for the repayment of the loss.

Relationahips are key. Some agents take their escrow to the last company who gave them tickets or dinner and some find a closer who knows their stuff and communicates well and sticks with them.
They are generally the ones who will throw their closer (or the other agent or the lender under the bus) if things get sticky.

Elusive Value: Title and Escrow

November 15th, 2009 at 8:58 am

Rhonda, those are great examples of a Realtor not understanding what impacts the rest of the team and proactively workng to insure a smooth closing.

Some other perrennial favorites are:

Make sure your Purchase and Sales agreement includes a legal desctiption, NOT a tax account number or an address. If it’s long attach it. This avoids misunderstandings about what is being sold. Check the map attached to your preliminary title report when it comes.

The Escrow Agent and the lender will want all addendums to the Purchase and Sales Agreement, not just the ones that the Realtor woiuld like to share.

If your client is going to use a POA tell the lender and the Escrow Agent early. Both Lenders and title companies must approved the use of a POA in a closing and certain people who have a fiduciary capacity cannot choose to have an Attorney in Fact sign for them. (like Trustees, Guardians etc)

Escrow can’t work with verbal instructions so if you have decided to purchase a home warranty (for instance) from your commission make sure you follow up with a new Broker demand.

Discuss with your client what constitutes “collected funds”. We still get Buyers coming in with checks from their Merrill Lynch money market account who are less than happy to learn these funds aren’t collected and there will be a delay for them to “collect” in the escrow Trust Account.

When you get an estimated HUD (that the escrow officer has worked miracles to get out prior to closing) LOOK at it and don’t just file it away with the other paperwork.

I could go on……but the difference may be that many escrow people (especially in slow times) don’t feel they can pick and choose when it comes to business.

Elusive Value: Title and Escrow

November 15th, 2009 at 7:17 am

Tim, you really hit on a topic that resonates with me. It’s pretty complex as well. Jillayane and Rhonda have both talked about components of it. Our customer and clients both need to better understand more about what we do. Escrow people, need to recognize that almost every phone call is a teaching moment (if the customers and clients are willing) And having classes about what escrow does is imperative, just not very sexy.

I can recall having a class called…”Things that go bump in the closing room” – all about small things that Realtors do or don’t do which can cause a delay or a blow-up. I.E. writing a Purchase and Sales Agreement for an FHA borrower with a seller concession. If you don’t clarify that the concession includes or does not include FHA non-allowable closing costs the transaction goes “bump” in the closing room. There were about 20 or 30 such things mentioned in the talk. Understanding how our jobs interact, escrow, Realtor and lending is critical.

Assertive communication is another thing. No escrow personnel should have to be browbeat or verbally abused by a client or customer. Escrow staff should be taught good communication skills and assertiveness. Their management should support them to the point that they could “fire” a customer who continually verbally abuses them, threatens every closing and just generally makes life miserable.

Proactivity. If everyone on the transaction doesn’t understand that part of all our job is to looks down the road and based on our collective experience be able to “see” and takes steps to resolve issues, then we all sink with the broken link. No contact information for the Seller from the listing agent results in no pay off information or late payoff information which results in a delay closing or a nasty suprrise like a pre-payment penalty which results in dissastified clients and customers.

And finally…expectations! Title company sales people go out, get a new customer….do a little happy dance and for the most part slam them into escrow. How about meeting and discussing how this relationship will work. What are realistic expectations and desires about communicating about files, communicating with the Sellers and Purchasers? What should happen if an issue developes? What is the best way to reach you? Who else is on your team and what do they do? It takes a village to close an escrow (especially these days)

It’s just like any other relationship and, for a healthy one, must be nurtured like any other.

Kudos to the Rain City Guide again!

FTC Considers Total Ban on Upfront Loan Modification Fees

September 17th, 2009 at 8:47 pm

I agree with you Jill. I am sick of hearing the stories and complaints about the loan mod vultures. We have a fraud prevention group here in Portland and our state agency (Department of Consumer Finance) at our meeting this week said complaints about loan modification scams and short sale consultants are way up.

Oregon has just past a law that requires the lender to have a meeting with people seeking a loan modification BEFORE they can proceed with a foreclosure. The distressed homeowner can have any advocate they like attend the meeting.

Maybe this will bring a few more of the lenders to the table in good faith.

Good Faith Estimate - Protecting Your Earnest Money

June 1st, 2009 at 3:55 pm

As a 30+ year escrow professional I can’t say enough how very wise I think this is.

It’s been a good escrow practice to generate a HUD once escrow receives loan docs and get that out to all the parties, their lender and agents. But that time frame is really too late if there is a big problem.

As Real Estate Agents, it is very important to take this lever of responsibility to insure your transactions go smoothly!