100 money orders totaling $50,000? How we handle cash payments in excess of $10,000…

On June 26, 2013   /   Blog, Escrow  
Cash earnest money deposits in excess of $10,000

The Financial Crimes Enforcement Network (FinCEN) recently published their findings of a study they conducted assessing Suspicious Activity Reports (SARS) and Suspicious Form 8300 Filings Related to Real Estate Title and Escrow Businesses 2003–2011. The study confirmed the importance of Title and Escrow Companies filing of IRS Form 8300 – Report of Cash Payments Over $10,000 Received in a Trade or Business. Read on for the details of a transaction in which cash was received and reported.

A $50,000 earnest money deposit

Cash earnest money deposits in excess of $10,000An escrow officer for one of our sister branches contacted our National Escrow Administrators for assistance. She had just opened a new sale transaction. It was the purchase of a REO property with a sales price of $1.3 million. According to the Purchase and Sale Agreement the buyer agreed to deposit $50,000 in earnest money with the escrow company and the sale was scheduled to close in less than a week. So far so good, right?

Along with a copy of the Purchase and Sale Agreement, the real estate agent delivered an envelope to the escrow officer. Inside the envelope was the earnest money deposit of 100 money orders, in increments of $500. After she picked her jaw up from her desk, she informed the agent she would have to file some additional forms and needed some information from the buyer. She explained she would look into exactly what information she needed and get back with him. This is when she contacted her Escrow Administrators.

She was correct to do so. The receipt of the money orders triggered an obligation to file IRS Form 8300. Pursuant to the IRS Regulations, businesses who receive “cash” payments in excess of $10,000 need to report the funds received.

“Cash” as defined by the IRS is:

  • Coin and currency
  • Cashier’s checks, official checks, bank drafts, traveler checks and money orders if they have a face value of $10,000 or LESS.

Settlement agents must file Form 8300 upon receipt of multiple “cash” items received in one transaction. The multiple payments may have been made at one time or over the course of the transaction. A settlement agent must report upon receipt of the final “cash” item which puts the total of all “cash” received more than $10,000. Obviously this was the case in this deal.

Potential delays to be aware of

The National Escrow Administration sent the escrow officer a copy of Tech Memo 153–2012 Reporting Cash Payments over $10,000 using IRS Form 8300 and called her, as there was more than one issue to discuss. First, the escrow officer needed to obtain a signed W–9 – Request for Taxpayer Identification Number and Certification, as well as a copy of the buyer’s driver’s license. Next, she was reminded the form had to be filed within 15 days. Lastly, they discussed the timeframes for clearance of the funds.

The money orders were issued by Western Union® and MoneyGram®. Money orders may clear as soon as seven to ten business days but they could take longer depending on which Federal Reserves they were drawn on. Additionally, money orders are often counterfeited. If a money order is counterfeit, it could take weeks before it is discovered and the Company is notified. When this occurs, the funds previously credited to the trust account are immediately debited from the account. This poses a risk to the Company if the file closes and is disbursed without allowing sufficient time to pass to ensure they are not fraudulent.

Communication and cooperation are key

The escrow officer contacted the selling agent to let him know what she needed from the buyer and informed him the closing date would have to be delayed. The agent made arrangements for the buyer to come see the escrow officer by the end of the week. Fortunately, both the buyer and seller understood the need for an extension to the closing and the buyer assured the escrow officer he would wire the balance of the closing funds.

The buyer was cooperative, so she asked why the earnest money came to her in this manner. Turned out he is a real estate investor. He regularly attends auctions. At an auction the successful bidder has to pay right then and there with either cash or certified funds which is why he had money orders in that denomination. Since, at an auction he does not know what the sales price will be he regularly purchases money orders in small amounts so he can pay for his purchases. This explained why he seemed unfazed by the request for his Social Security Number and driver’s license – he was familiar with this process.

MORAL OF THE STORY

Real estate transactions are often a target for illegal activity including a means to launder funds. Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them. This is true, unless the funds are reported. Settlement agents have a duty to monitor and report “cash” payments to the IRS. Failure to do so can result in hefty fines.

Although the escrow officer did not believe this buyer was up to anything illegal, she still identified she had a responsibility to report the “cash” received, eliminating the Company’s risk of being fined. In order to ensure she did this properly she did not hesitate to contact National Escrow Administration for assistance.

Questions or comments? Please share below!

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Escrow Officer Banned Because of Short Sale Oversight

On May 31, 2013   /   Blog, Escrow  

The 90-Day Condition…

Short pay lenders are serious about the principals upholding the terms and conditions placed on them by the short sale agreement. One of the most common conditions reads, “The property will not be sold within 90 days of the closing date of the subject real estate purchase contract.” Short pay lenders enforce this condition by checking the chain of title post–closing to verify the property owner matches the buyer shown on the settlement statement provided them at closing.

When the title to the property is in the name of someone other than the buyer, they immediately ban the closing agent from closing any further short sale transactions involving the lender or from closing any new loans originated by the lender. The ban on the closing agent is personal and it is serious.

True Story…

An escrow officer at one of our sister companies closed a transaction July 31, 2012. The Realtor® completed a Short Sale Affidavit spelling out the above condition not to resale the property for 90 days. The seller signed the affidavit, as did the real estate agents – but not the settlement agent or the buyer. Their information was printed on the affidavit but their signatures were never rendered. On September 27, 2012 (just 57 days later) the same escrow officer closed a subsequent sale of the subject property to a new buyer.

Months later the escrow officer was working on another unrelated short sale transaction with the same lender. The agent was notified by the short sale processor of the following message, “All of our files are sent through quality review and the settlement company and agent do not meet our quality review guidelines. You will need to submit documents with an alternative settlement agency. Thank you.”

The agent did not have a clue why the short payoff lender needed to have the closing moved to another settlement agent. The settlement agent did not know either, so she reached out to the lender to find out why and this was their response:

We approved a short sale for a loan that was secured by the property located at 7519 Paradise Drive, Anytown, USA. The HUD–1 shows that this transaction was closed by an escrow officer of FN Title on July 31, 2012. All parties to the transaction, including the escrow officer, signed a Short Sale Affidavit in which the parties agree not to sell the subject property within 90 days of the close of the short sale.

However, public records show that the buyer from the short sale sold the property to another entity on September 27, 2012. A copy of the Grant Deed from the September sale was notarized by the escrow officer.

Wells Fargo Home Mortgage has concerns with business practices that may place us, our customers and/or investors at greater risk of loss in connection with short sales – whether we are the servicer on the loan being paid off short, the lender on a new loan for the property or both.

The following business practices are unacceptable:

  • Allowing a sale to close when the seller has not yet acquired title and paid off all liens that are not assumed (with the approval of the lender).
  • Producing a HUD–1 where the parties to the transaction are listed differently than the deed transferring the property shows.
  • Allowing a short sale to close without following all the requirements of the lender(s) being paid off for less than the full amount owed. This includes but is not limited to fee specifications, parties to the transaction and execution of all related documents.
  • Knowledge that the parties to the transaction are using a trust and/or transfer of beneficial interest that may mislead the current or new lender(s) as to the true identities of the parties involved.
  • Allowing a short sale to occur between parties that are related or affiliated by family, marriage or commercial enterprise.
  • Allowing a short sale to occur with an agreement or understanding between the parties that the Seller will remain in the subject property as a tenant, or will later obtain title or ownership of the subject property.
  • Allowing a short sale to occur without disclosing all agreements, understandings or contracts relating to the current sale, or subsequent sale, of the subject property of the short pay lender.
  • Allowing a short sale to close in which any of the parties to the short sale, including the settlement agent, will receive any proceeds or other remuneration from the short sale transaction except as set forth in the related settlement statement.
  • Allowing a short sale to close in which any of the parties to the short sale have any knowledge of any offer to purchase the subject property for a higher purchase price than contained in the short sale purchase contract that has not been presented to the short pay lender.
  • Allowing a short sale to close with any knowledge that the subject property will be sold again within 90 days of the date of the short sale.

Wells Fargo expects that settlement agents closing its transaction will not engage in this type of conduct. For this reason, Wells Fargo has declined to use your services at this time.

The escrow officer is appealing the decision of the lender banning her from closing any further short sale transactions or new loans, since she did not sign the Short Sale Affidavit containing the condition not to re–sale the property for at least 90 days. In response to the escrow officer’s appeal, the transaction has been reviewed in greater detail only to discover additional discrepancies as follows:

  • The 1st lienholder’s short pay agreement only allowed $2,000 to be paid to the second. The second lienholder demanded $4,700. The buyer paid the additional $2,700 at closing. She closed without the 1st lienholder’s approval of the additional amount being paid.
  • Payment of the additional $2,700 was not reflected in the 500 section of the HUD as a payoff, it was disclosed as a buyer charge in the 1300 section of the HUD.
  • After adjusting the prorations at time of disbursement there was an additional $46.48 in favor of the seller. The escrow officer paid the overage to the 2nd lienholder, instead of the first who was only allowed to receive $2,000.
  • Post–closing, the buyer received a refund of $564.55 even though the short pay agreement indicated, “Neither the seller nor any other party may receive any sale proceeds nor any funds as a result of this transaction except as noted in this Demand Statement.”
  • The borrower on the short pay letter does not match the seller on the HUD. The borrower was a single woman who is now married. She and her new husband signed the closing documents without reference to her maiden name.

When questioned, the escrow officer’s response to the additional discrepancies were that she felt the short pay lender’s approval of the HUD was sufficient approval for the changes.

MORAL OF THE STORY

Taking the measures listed below will prevent the settlement agent and their Company from being banned from providing settlement services.

If the settlement agent is closing a second transaction on the same property, they should demand to see the short pay agreement and all other documents to ensure the property can be re–sold within the timeframe of the new contract.

  • If there is more money to be paid to a junior lienholder than the 1st lienholder, the transaction cannot close without an amended agreement from the short pay lender. An approval of the settlement statement does not constitute a change in terms of the agreement.
  • If the agreement states that no one in the transaction is to receive “proceeds or any funds” that means “refunds” too. No post–closing funds should be given to any party. Instead, the refunds should be sent to the short pay lender to apply toward their shortage – even if the borrower overpaid at closing.
  • The seller on the settlement statement and the borrower named on the short pay agreement must match. If the borrower on the short pay agreement was later married, the settlement statement should reference her maiden name as well as her married name. The seller on the settlement statement and the borrower named on the short pay agreement must match. If the borrower on the short pay agreement was later married, the settlement statement should reference her maiden name as well as her married name.
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6 Infographics that Answer Commonly Asked Real Estate Questions

On May 21, 2013   /   Blog, Escrow, Title Insurance  
Property tax annual cycle

Sometimes a picture can communicate information much more clearly and quickly than words.  With that in mind, we’ve used diagrams and infographics here to answer common questions that our Escrow Officers, Title Officers, and Property Information Specialists receive.

The six infographics below answer tough questions relating to real estate probate situations, property taxes, REO transactions, and bankruptcy.

 

1. Probate Path – Single at Death

This flow chart illustrates who now owns the property when an owner of record is deceased and single at death. Click the following link for more information: Probate Path – Single at Death

Probate path - Single at death

 

2. Probate Path – Married or Domestic Partner Community Property

This flow chart illustrates the process of identifying who now owns the property in a situation where one partner is deceased and the real estate is considered community property.  Click the following link for more information: Probate Path – Married or Domestic Partner Community Property

Probate path - Married at death

 

3.  Probate Path – Married or Domestic Partner Separate Property

This flow chart illustrates the process of identifying who now owns the property when one or both partners is deceased and the real estate is owned as a separate estate.  Click the following link for more information: Probate Path – Married or Domestic Partner Separate Property

 

probate path married separate property

 

4. The Property Tax Annual Cycle

This infographic answers common questions relating to property taxes in Washington state, including how are taxes calculated, when they are due, and how taxes are prorated for buyers and sellers.  Click the following link for more information: Property Tax Annual Cycle

Property tax annual cycle

 

5. The REO Transaction Process

This infographic illustrates the timelines in escrow for purchases of bank owned properties.  Click the following link for more information: REO Transaction Process

 

REO Transaction Process Infographic

 

6.  The Lifecycle of Bankrupcty

This flowchart depicts the complex process of filing for bankruptcy and includes the most common paths for chapters 7, 11, and 13.  Click the following link for more information: The Lifecycle of Bankruptcy

 

Life Cycle of Bankruptcy infographic- Chapters 7, 11, and 13

 

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Announcing the Relocation of Our Bellevue Escrow Branch!

On May 16, 2013   /   Blog, Escrow  
Ticor Title in Bellevue, WA
Ticor Title in Bellevue, WA

Ticor’s Bellevue Escrow Branch

We are very pleased to announce that our escrow branch in Bellevue has relocated to a more upscale and spacious location!  Business is on the rise and with the increased business comes changes and the need for more space.

The new location is conveniently located just off I-405 at the SE 8th Street exit in the Gateway Building.

We think you’ll love the free parking, easy access from the street level, open look & feel, and of course the same friendly faces!

Where to find us

11400 SE 8th St #110
Bellevue, WA 98004
(425) 467-9170

Map & Directions


View Larger Map

We are conveniently located in the Gateway Building just off 405 at the NE 8th St Exit. We offer easy access to the building with plenty of free street-level parking

When you arrive at Ticor Title in Bellevue you will be greeted with a smile, offered refreshments, and promptly escorted you to your reserved signing room.

At Ticor Title in Bellevue, Our team of escrow professionals is committed to ensuring that your Experience throughout the closing process is the finest possible.

If you have questions at any time throughout your escrow transaction please let us know. Thank you for choosing Ticor Title.

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Zero Demand Statements & Why We Utilize Them

On April 23, 2013   /   Blog, Escrow, Title Insurance  

Recently, one of our sister offices opened a For Sale by Owner transaction with a sale price of $495,000. The escrow assistant, Debbie N., ordered a title report. The title report reflected two deeds of trust on title, each with a reconveyance recorded with a side note that read, “Said deed of trust appears to be reconveyed by the above recorded instrument. An inquiry must be made with the lender confirming payment prior to close.”

Debbie requested loan numbers from the seller, an unmarried woman. The seller responded that the loans were paid in full and she had a new loan that just recorded. Debbie requested payoff information for the new loan as well as the prior two loans. The seller reluctantly provided the loan numbers and contact information for all three lenders. Debbie then ordered an updated title report to reflect the new deed of trust, which had recently recorded.

A private lender was used

The new loan was through a private lender, Ronald V. Cupp. Debbie ordered the payoff information and at the same time contacted the former lien holders to verify they had, in fact, received payment in full. Neither lender would confirm payment in full to Debbie without a signed third–party authorization from the seller.

Debbie tried another tactic; she ordered payoff statements from both lenders in writing. Neither lender responded immediately to her request. Debbie printed copies of the recorded reconveyances and found they were signed by none other than the new private lender Ronald V. Cupp!

Cupp signed as attorney–in–fact on both reconveyances. The documents were notarized. Debbie looked up the notary information only to discover the notary worked at a Mail Boxes, Etc., not at the financial institution purportedly releasing the lien.

“Debbie looked up the notary information only to discover the notary worked at a Mail Boxes, Etc.”

Debbie tried calling the first lienholder one more time. Lo and behold the first lien holder confirmed their loan had been fully paid and stated it would take 21 days to research the validity of the reconveyance. In the meantime the second lienholder finally responded to Debbie’s payoff request and faxed a demand for more than $95,000.

Buyers and seller had been waiting for loan documents to arrive for closing. There had been a long delay due to appraisal issues and both were very anxious to sign, especially the seller. Debbie allowed the signing to proceed with payoff to the second lien holder in the amount of $95,000 showing, as well as the payoff to Ronald V. Cupp in the amount of $137,000.

For the first lienholder, Debbie estimated reconveyance fees and explained to the seller the Company would not close until the first lienholder provided a zero demand and/or a reconveyance executed by one of their corporate officers.

THE MORAL OF THE STORY

When a lien is extinguished with no new money or conveyance, title examiners are trained to add the note requiring verification of an actual payoff. It is imperative the settlement agent exhausts all avenues to obtain proof of payment in full through a zero demand or other lender–provided statement.

The industry can no longer rely solely on the recorded release document, since so many of them have been forged and recorded. The proof of payment in full must be provided to the title officer prior to closing the new transaction. If proof cannot be obtained, then the transaction should not close.

Surprise! Another lienholder was found

After much persistence, Debbie learned the first lienholder’s loan number the seller had provided was for a previous loan that was paid in full. However, there was a current loan with an outstanding balance of more than $358,000.

The escrow officer called the seller and asked her about the loans, but the seller quickly got off the phone and said she was going to talk to her attorney. The file was put on hold, since there were not enough sale proceeds to pay all three loans:

1st Loan Payoff = $358,000
2nd Loan Payoff = $ 95,000
3rd Loan Payoff = $137,000
TOTAL $590,000

No sale…

The buyer was devastated to learn they were not going to be moving into their dream home. They were holding out for some reasonable explanation from the seller, but the seller refused to talk to them or anyone else involved in the transaction.

Debbie’s diligence in following Company procedures is commendable. Had she not unraveled the mystery of the forged reconveyances, the buyer would have closed and most certainly the 1st and 2nd lienholders would be foreclosing for the prior owner’s unpaid loans.

The Company’s potential liability would have been $453,000 plus legal fees. For her expertise and effort Debbie was rewarded and recognized by our company.

Questions or comments? Please share below!

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Top 10 ways TicorAgent 2.0 can help you close more business

On April 9, 2013   /   Blog, Escrow, Technology  
Ticor Agent 2.0 Real Estate App

It’s been four months since we kicked off our TicorAgent 2.0 app for iOS, Droid, Mac and PC.  And in that time we have heard rave reviews from across the greater Puget Sound area.  The feedback from Brokers and Loan Officers tells us that the app is intuitive to use, saves time, and helps to quickly answer the tough payment and net proceeds questions on the fly.  We are also receiving feedback that the app helps Brokers to better inform sellers and potential clients during listing presentations.

Interested?
Contact us for a demonstration.

  • Contact your Ticor Sales Executive for a demonstration and setup.
    Ticor Agent 2.0 Real Estate App

With such positive feedback coming in, we decided it’s time to share the top ten tough questions that this powerful little app can answer in the hands of a real estate professional.

Top 10 questions that TicorAgent 2.0 can answer on the fly:

  1. What will I net at closing when my house sells?
  2. How much house can I buy for a specific payment?
  3. What will my closing costs be?
  4. How will a change in interest rates impact my buying power?
  5. When will I break even if I refinance now?
  6. How does renting vs. buying compare, given my budget?
  7. What will my home have to sell for if I want to net a specific amount at closing?
  8. How will my net proceeds change if my home sells for less than the listing price?
  9. What is my current loan balance?
  10. What estimated house payment/price do I qualify for?

How to get the TicorAgent 2.0 app

The TicorAgent 2.0 app works on Android, Apple, and Blackberry mobile devices as well as PCs and Macs.  Here’s a breakdown on where to get it:

Android devices – Visit the Google Play store and search for TicorAgent 2.0
Apple iPhone, iPad and iPod devices – Visit the App Store from your device and search for TicorAgent 2.0
PC and Mac users – Visit http://ticoragent.com/2/ and click the button that says “Get the App”.  Download and install the program.

Questions or comments?  Please share below!

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Alert Escrow Officer Foils Forgery

On March 27, 2013   /   Escrow, Title Insurance  
signature examination in escrow

signature examination in escrowTraci F., an escrow officer out of our sister office in Vancouver, Wash. was handling a short sale transaction. According to the listing agent, the property owner was unavailable to sign his closing documents because he was in the Ukraine.

The agent also said the owner was not going to be able to come back to the U.S. to sign his documents, so Traci began making preparations to have the documents executed internationally. Days later the agent called to tell Traci the seller was suddenly able to catch a flight back to the U.S. and was on his way to her office to sign a Power of Attorney (POA), giving his brother the power to sign on his behalf. The agent was extremely excited and insisted the owner would be at her office in the next 15 minutes.

Synopsis

A seller located in the Ukraine suddenly appears in our Vancouver, Wash. office to sign a Power of Attorney, granting his brother the authority to sign on his behalf. A few days later, the supposed brother appears for the signing as attorney-in-fact. Guess what – it’s the same guy, and no, these guys are not twins!

Something seems fishy…

Traci thought it odd the seller was able to find a flight to the U.S. so quickly, however. She drew the POA document as instructed and it was executed, thus granting the ability for the owner’s brother to sign. A few days later the brother came in to sign on behalf of the owner. Something didn’t seem right, as Traci was fairly sure this was the same gentleman who had come in to sign the POA – representing himself as the seller – a few days before. The two were said to be brothers, so Traci thought similarities seemed possible and the “brother’s” ID photo matched his appearance. After the signing, Traci asked the opinion of the office receptionist, who also thought it was the same individual who had come in to sign a few days previously.

After further examination…

Traci had a gut feeling something was wrong with the situation and conducted more research. The printing and signature from the POA and seller’s newly signed closing documents appeared to be very similar. Traci examined the copy of the ID she had taken from the individual who signed the POA (representing himself as the seller) and the signature did not appear to match the one she had received on the POA. Traci brought the signed documents and ID copies first to her branch manager and then the county manager. The signatures on the seller’s ID did not appear to match up with the seller’s signature on the POA. But Traci was still certain that the seller and the brother were the same individual, posing as separate individuals.

As a result of her suspicions, Traci and her manager contacted the listing agent to let him know we would not be able to accept the POA. Traci expected the agent would be at least slightly irritated, however no questions were asked and no arguments were made. Traci made arrangements to contact the seller directly to execute the documents in the Ukraine.

Moral of the story

Traci did the right thing by not confronting the parties with her suspicions. Instead, she contacted her manager and together they denied the use of the POA, thus protecting the Company from insuring a deed with a possible forgery. If we had accepted and insured a forged deed, the owner could have come back to the buyer laying claim to the property. We are expected to protect the buyer’s ownership interest under the owner’s policy of title insurance issued through this transaction, since protection against forgery is the cornerstone of any of our policies.

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A Big Notary No-No

On February 25, 2013   /   Blog, Escrow  

A mobile notary failed to have an Occupancy Affidavit signed by the borrower. The escrow officer gave the mobile notary the affidavit and asked her to go back to the borrower to have it signed. Instead of returning to the borrower’s residence to have the document signed, the notary signed it herself!

James S., an escrow officer from one of our sister branches, requested a mobile notary from Bancserv to perform a signing at a borrower’s residence. The transaction was a $610,000 refinance that involved the signing of many loan documents. The notary assigned to the case was Kimberly G.

Kimberly performed the signing and promptly returned the documents to James. James reviewed the documents while packaging them to return to the lender. During his review he found an unsigned Occupancy Affidavit and sent it to Kimberly with instructions to return to the borrower’s residence to have it signed. Kimberly apologized for her oversight and agreed to have the affidavit signed.

Anything to Meet the Deadline…

Kimberly later faxed a copy of the signed and notarized affidavit to James in an attempt to help meet the rate lock deadline. Apparently, she didn’t have time to get it signed the previous night when James originally made the request and had to fax it to him the following day to expedite funding.

“Unbeknownst to Kimberly, she had just forged the signature of a superior court judge as well as his wife’s!”

James reviewed the affidavit and recognized it as a clear forgery. The borrowers were a married couple and their signatures on the affidavit looked nothing like the signatures on the other loan documents. Unbeknownst to Kimberly, she had just forged the signature of a superior court judge as well as his wife’s!

The Real Signatures Were Obtained

James ordered another notary from Bancserv and had the affidavit signed by the real borrowers. Then he went one step further and contacted his escrow administrator who reported the incident to Bancserv. The management team at Bancserv immediately removed Kimberly from its list of registered notaries and reported the incident to the Secretary of State, the regulator of notaries.

When the swift acting management team at Bancserv questioned Kimberly about her actions she claimed it was always her intent to get the true signatures before sending the original document and that she even went as far as to call the borrower for an appointment the evening after the forged document was faxed. Of course at that point another notary had already been assigned.

Then the administrator notified the Company’s field compliance team who promptly removed Kimberly from the Company’s approved notary list.

Integrity Was Rewarded

For James’ attention to detail and for not turning a blind eye to the forgery, the Company has rewarded him. His detection of the forgery was nothing short of heroic, and the fact that he had the fortitude to do something about it to save the Company from a future claim is impressive. We all know it would have been easier and faster to accept the affidavit and forward it on to the lender, but he didn’t. The Company admires James for his integrity.

Questions or comments? Please share below!

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TicorDashboard Replaced by SmartView on Feb 11

On February 5, 2013   /   Blog, Escrow  

We are delighted to announce that our current transaction dashboard will be replaced with a more functional and accessible system called SmartView.

SmartView Real Estate Transaction Dashboard

SmartView will enable you to keep your finger on the pulse of every transaction.

Smartview will enable you to keep your finger on the pulse of every transaction!

The benefits to you and your clients include:

  • Document accessibility
  • User friendly email links to transaction documents
  • Compatability with the most popular internet browsers
  • Decreased delivery times and reduced consumption
  • E-mail or print single documents or entire packets from the Web
  • Clearer communication throughout each transaction

SmartView will be live on Febrary 11.

How to take advantage of SmartView

There’s nothing you need to do at this point.  Send us your next order and you will automatically receive SmartView transaction summaries once per week via email.

If you have questions, please contact your Ticor escrow officer.

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Two HUDs Are Not Better Than One…

On January 22, 2013   /   Blog, Escrow  
Short Sale HUD-1 Settlement Statement

Marta D., escrow officer for one of our sister branches, knows the importance of adhering to the RESPA Rules. When the third party negotiator asked her to prepare two different HUD–1 statements for the same transaction she refused. Read on for all the details.

Short Sale HUD-1 Settlement StatementShort sale transactions can be quite challenging. Settlement agents act as a neutral third party working diligently to ensure all the terms of the transaction match up and the instructions of the parties are mutual. This is even more complicated in a short sale where there are multiple lien holders agreeing to take a shortage.

All Lienholders Must Agree…

In a short sale, the first lienholder regularly specifies the terms of their approval. The letter often includes the minimum amount due to them, approved closing costs, buyer’s name, commission and the amount which may be applied to subordinate lien holders. If the second or third lien holder requires more than the approved amount, the settlement agent must ensure the terms of the first lien holder’s approval letter are not violated.

In some cases, depending on the loan program, the buyer or real estate agents may contribute towards the short fall amount due the subordinate lender. In other instances the seller or their representative must negotiate with the second lender to settle for the amount permitted by the first lien holder. Regardless, everyone has to agree before the file can close and it all must be properly disclosed on the HUD–1 Settlement Statement.

Section 4 of RESPA dictates proper HUD–1 preparation. Appendix A to Part 3500 of RESPA states:

“This form is to be used as a statement of actual charges and adjustments paid by the borrower and the seller, to be given to the parties in connection with the settlement.”

A Request for Two HUDs

When closing a RESPA Regulated transaction, whether it is a sale or refinance, the HUD–1 must be a true reflection of all receipts and disbursements made as a part of the transaction. Marta knew the RESPA Regulations quite well, which is why she was shocked by the request she received. This transaction was being negotiated by a third party negotiator, who sent her an email which read:

“This HUD is to 1st mortgage for now. That is all 1st mortgage is going to pay to 2nd: $4,649.91. We will need another separate HUD to 2nd, which the buyer will contribute the difference for payoff to 2nd total: $12,000.”

Marta was shocked and offended. The negotiator even went as far as to tell her other settlement agents have done it for her. This is when Marta decided to report the incident to her manager who reported it to settlement@fnf.com. She refused to accommodate the request, forcing the negotiator to do her job and negotiate with the second lender. The file successfully closed, without deceiving anyone by using only one HUD–1 settlement statement which properly disclosed all charges and adjustments.

The Moral of the Story

When an escrow and title company closes and insures a new buyer, in some cases a new lender as a part of a short sale, they must ensure all terms and conditions of the short pay lender are met so they will release their lien. If the terms are not met, the short payoff may be rejected, resulting in the insured buyer and lender filing a claim on their title policy.

In some instances the title insurer ends up having to pay the difference between the loan balance and shortfall in order to obtain a release of lien from the short pay lender and protect their insured. Marta knew of this risk and her obligation to ensure her HUD–1 settlement statement was correct and accurate.

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