Tag Archives: Legacy-Escrow-Service

Yikes, that was close. Or, was it? Convicted felon making loans.

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Man convicted as being a key player of “swindling” $50 Million likely to begin serving 15 yrs. in prison and reportedly has been selling “reverse mortgages” to senior citizens while waiting for date to report to prison.

Evidently, The Washington State Dept. of Financial Institutions (DFI) denied his loan originator license on Dec. 17th of last year. DFI get’s it right, but it still begs the question: How did this fellow get through internal controls at the company he last worked for? Sloppy at best.

Bill Morlin reports from the SpokesmanReview.com:

“Michael Duane Smith has worked as a “reverse mortgage planner

The Dustin Luther factor: Where it all began, sprinkled with blogging surprises

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First, I don’t know about other’s experiences in blogging, but stumbling upon Rain City Guide over a year ago or so and Dustin’s introduction to me of the world of moving away from a static glorified business card (called a website) to that of the dynamic and interactive world of Blogging has had a tremendous impact on me and as a small business owner (like everyone here).

For example, I’ve been able to make contacts with people whom I would never have had the chance to without the platform of blogging, both personal contacts and business contacts. Today, I got a chance to head back to my old stomping grounds in Seattle due to a courtesy signing with a client who teaches at Seattle University. After finding a parking spot, I headed over to the campus and walked to the School of Engineering to meet for our appointment. After about 30 seconds, I realized I was talking to an old neighborhood acquaintance whom I have not seen for over 30 yrs!

Inspired, after the appointment, I drove up Madison St. towards 19th and headed North towards St. Joe’s School on 19th and Aloha where I went to school as a kid. On the Northwest corner of 19th & Aloha is a small building where I was given my first job as a skinny, messy 70’s style haired bloke. The impact of that first job is really what set the stage for the foundation of work ethic and character building.

My first job was given to me by the late George and Evelyn Benson of Benson’s Mission Pharmacy on Capitol Hill. For those unfamiliar, George Benson was a long time pillar of the Capitol Hill community and a respected Seattle City Councilman. You want to talk about customer service? I distinctly remember George pulling up in his car to hand deliver a prespcription for my mom or dad at our front door a few blocks away. Those were the days of intensely personalized service. Mission Pharmacy and the Benson’s are no longer, but the windows I washed and the sidewalk I swept are still there as they were 30 years ago.

I headed over to my old house where I grew up, drove around the front of the home, got out of my car and headed over to the steps and walkway that wind up to the front door, but I stopped short of that trek—memories just racing through my head. Walking back to my car, I then drove around to the alley, which really was “our” front door entrance. Peering through my passenger door window I stared up into my old bedroom window and into the back yard. I was too embarrassed to walk up and knock on the door. Perhaps another day.

Part of the motivation for telling you this is about finding out who you really work with and the idea of “trust.” Does it matter to you? Trust in real estate is the glue that keeps customers coming back to you. Trust to do the right thing. Trust to work in the best interest of our mutual client.

When you strip away all the marketing persona and fluff in our industry and get to know potential new clients in a transparent and personal way, giving a glimpse into what makes you tick, warts ‘n all, it is remarkable how quickly you forge trust in the person standing across from you. Finding a common denominator and building trust with a potential client on a level that has nothing to do with business has been exceptionally fruitful.

Since the beginning of this year, just days ago, through blogging, I have reunioned with two old childhood friends and received fruitful clients. When you strip it all away I’m not terribly different than any other agent or loan officer trying to make a living. On Thursday, I headed out to brokers opens to meet some new people in the business who work in our area and I bumped into an old “acquaintance” whom I met at college in 1985. I haven’t seen her for 21 yrs. The funny thing about the meeting was that she (the agent) mentioned to me “ya know, I just speak my mind, and I wanted to you to know that I had a crush on you way back when we were freshman.” What a Brokers open and what a week.

Dustin, although I’ve never met your family personally, thanks for introducing me to a way that a small fry can compete with the Goliath’s.

CNN Money.com: Appraiser sues WaMu

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The intersection of ethics and real estate meet again

As if WaMu didn’t have enough on its public relations plate, CNN Money reports:

Jeniffer Wertz, who is seeking unspecified damages, says WaMu stopped accepting her appraisals in mid-2007 a month after she reported that her local housing market in California was “declining.”

Evidently, Wertz claims that Washington Mutual wanted her to change her forecast to “stable.”

And on the other side of the coin

Bloomberg reporting that inflated appraisals causing significant losses to lenders.

`You started to see more and more loan products that would keep payments low, and I see that as correlating with appraisal pressure because those products only work in a rising market.”

(and, which loan products might those be I wonder tongue in cheek?)

Former guest at Inman Connect, Jonathon Miller, a sought-after New York appraisal and real estate consultant remarked:

“Lenders and mortgage brokers routinely pressured appraisers to boost values, said Jonathan Miller, a New York property appraiser for more than two decades who writes a blog about the problem.”

And more from the Bloomberg article….First American and WaMu working together?

“In New York, Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac, the two biggest buyers of U.S. mortgages. He also sued First American Corp.’s eAppraiseIT LLC for allegedly caving to pressure from Washington Mutual Inc., its biggest customer and the largest U.S. thrift, to inflate values.”

Ethics in real estate: oxymoron?

What I love about this business: the people

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Escrow is one of the toughest jobs in real estate, for a lot of different reasons. But, it is by far the most interesting from our experiences in that both Lynlee and I have sold (circa 1990) as licensee’s, bought and sold homes as homeowner’s and today as owners of an escrow company.

For example, in a recent day at the office we have had people curse at us, a customer who threatens to sue everyone in the deal including the clerk at the corner 7-11, an angry client yelling at their loan officer so loud that other tennants in our building start calling to see if everything is ok, then, before we have a chance to catch our breath, my wife comes smiling out of the signing room after meeting with a client. Looking at her, I say, “what are you grinning about?” To which she wryly remarks, “that customer just told me, ‘please don’t take me the wrong way, but you are a very pretty lady.”

You can be the scum of the earth to someone at 10am in the morning and then a hero just twenty minutes later.

In escrow you meet the most interesting people: From rock stars, to brain surgeons, shakers ‘n movers, CEO’s, farmers, war hero’s, teachers, politicians, pro-athletes and more. And, the occasional world famous writer to boot.

"Hope Now" program to curb delinquency/foreclosures fraught with problems

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The Hope Now program currently being proposed in the other Washington is designed to assist current homeowners with Adjustable Rate Mortgages (ARM’s) in which their ARM’s may adjust upward causing financial hardship. An issue of immense concern is how do you sift through the thousands of homeowners and qualify those who’s mortgages are about to recast to some ugly interest rate? Further, how do all the stakeholders and investors of these mortgages see this playing out—that’s the part Attorneys will have to fight about (what say you Attorneys?).

If the Government players in this program, including one of the lead Conductor’s in this orchestra, Treasury Secretary Paulson, have their way, the investors of these loans will have to be a good sport and play along, never mind losing copious amounts of money, nor the other legal implications.

‘The modification of existing contracts, without the full and willing agreement of all parties to these contracts, risks significant erosion of 200 years of contract law,’ said Joshua Rosner, managing director at an independent research firm in New York.

Let Brokers charge what they want. Do away with YSP.

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Couldn’t the whole yield spread premium (YSP) debate with all the trimmings end with a simple solution such as allowing the broker to charge whatever they want? Let the free market sort it out. Certainly lenders would have to be on board and do away with incentives or change them somehow, but it seems to me that everyone is making it so complicated.

Yes, compliance issues, licensing and fair dealing issues are important and should be implemented in some manner.

Solution:

  • Just disclose up front what the compensation is based on the interest rate or program the borrower qualifies for. Therefore…….
    • No more the need to attend sales seminars on learning how to overcome objections, which will allow more time to attend seminars on how to provide sterling service.
    • No more awkward moments for the loan officer attending an escrow singing when the borrower questions that “YSP thingy.”
    • No more loan officers asking escrow “how will you explain YSP” to the borrower, as if escrow’s response somehow dictates whether or not they will receive future business.
    • No more agents having to watch helplessly at their clients becoming frustrated or stressed out due to lending problems associated with YSP’s and the completely preventable situation where a transaction spirals out of control at the last moment.
  • How about lenders just have a simplified schedule of programs and rates that the borrower can choose from and if they pay a higher interest rate they receive a rebate that can be used on their behalf. How about just turning the PC monitor around and showing the consumer the several programs available and then have a good old fashioned counseling session. It would save every single moving part in a transaction a lot of grief. And it would save transactions from failing at the last moment because a “nuclear bomb disclosure” by a lender about the yield spread premium a loan officer is earning that freaks out the borrower.

I can just about darn near guarantee that if a consumer knows where all the chips are on the table, they would have no problem moving forward with a transaction. Give a consumer the very best rate they can qualify for, at the very lowest fee structure you can, with all the chips clearly on the table and Bam! you have a happy client, fostering long-term value.

When will someone just give the consumer what they want? Somebody is working on it and they are going to will be very successful. Is it really more complicated? If so, sound off.

Blog Wars: It's everywhere.

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The last month has been educational for me in a lot of ways about our industry and confirmed a lot of my thoughts, both good and bad. There is a lot of passion out there in the blogosphere and out in the work place. The one nugget I always come away with is that the real estate industry is full of very independent people who are fierce in the way they do business and in the manner in which they convey their positions on issues. Both in the work place and blogging, some are professional, others make fools of themselves, intended or not.

One common denominator I see is that people genuinely want to improve our industry, its function and image. The problem is, how can that happen with such fragmented independent practitioners that all play a part in this industry? There are so many moving parts with industry specific (lending, title, escrow, Realtors, consumers) internal self-serving issues. Perhaps this fragmentation of independent real estate practitioners is a core reason why the industry and associated moving parts has suffered from image and credibility problems for so long. Just take a recent look at all the folks that were operating under the radar over the past two or three years with criminal records.

Recently, I don’t know how many times on local or national blogs and forums, I’ve seen the quote from agents and loan officers, “sure be glad to see (insert any practitioner here) get out of the business,” or “I’ll be happy if there are less (insert practitioner) here as this market shifts,” and so on. Again, the problem is, everyone is saying it. It’s like each team praying to God…..”and help us beat the other team.”

Passion and Blog Wars extend far outside our real estate industry. That’s what is so interesting to me as a small business owner involved in the real estate industry and blogging. I know this is foreign for many of my friends and colleagues in the real estate business, but here goes anyway: The world does not revolve around real estate. The Blog Wars extend into every crack and corner of our society: soccer mom’s, politics, economics, Church, professional sports and the “Holy Land of Blogging” known as the technology and software industry.

Common myths & misconceptions of Escrow.

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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.

8) 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.

It's Stormy out there, but we are having fun!

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OK, so it’s stormy and gloomy outside and there are blogger civility issues going on. The stock market gloomy today? Oh yea, that too. But,we are having fun! What are you doing around the office to keep things bright and morale high?

We’ll, someone had a birthday at our office and her Elvis memorabilia continues to grow at her desk and Pumpkin season is here! I love the Fall. My wife dislikes it and hates my favorite saying this time of year: “it’s great Soccer weather!”

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The funny thing about this cardboard Elvis is that it has a sensor so that when someone walks by, Elvis talks! Elvis appears to also be light sensitive. When we turn off the lights after work, he said, “hi, good to talk to you.” Can’t wait till the night cleaning crew comes and turns on the lights. They will be in for a treat!

Does the NAR & the Big Brokers really want to fight The Blogosphere?

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There have been a lot of discussions lately regarding Blogging, both it’s merits and potential for fallout on many levels. The problem with trying to keep Blogging under wraps: If you do, you have the potential for political backlash, both from the agents that build the brand of the broker (Re/Max, Windermere, Coldwell Banker, etc. ) and the Blogosphere itself, an enormous Goliath. Is it a battle anyone really wants to have?

Over at the Seattle PI Real Estate Professionals Blog, agent Sandy Kaduce remarked, “they will take away my blog from me when they pry it from my dead cold hands.” And, our friends howling down in the Sun in Phoenix take on the National Assn. of Realtors possible policy on curbing blogging for its membership.

But, what if an agent’s very own client blogs about their very own listing for sale and soliciting advice from the general public? For example, this case at Seattle Bubble from blogger “Econ101”. (a little more than halfway down in the comment fields)

I’m not certain anyone understands the possible repercussions of curbing blogging.