Is Your Child Stealing?

A son was conducting business on behalf of his mother. She was selling off her assets including her real estate holdings. The sale of one of her estates was handled by our office. During the processing of the transaction, the mother provided signed wire-transfer instructions for her proceeds to be wired to her investment account at closing.

At closing, the son presented a new set of wiring instructions from his mother. The escrow officer was not suspicious of the new instructions at all because the signature on the first set of instructions and the second set of instructions matched. The escrow officer closed the transaction and wired more than $54,000 in proceeds.

Four days had passed when the escrow officer received a call from the mother asking about her proceeds. The escrow officer gave the mother the bank information from the second instruction to wire. The mother gasped – it was her son's account the funds were wired to, not her investment account!

The son had used white correction fluid on the bank portion of the instruction and changed the bank name, address and account number to his own, and copied the form with his mother's signature already on it. He was likely assuming the bank wouldn't match the beneficiary name (his mother's) on the incoming wire to the account name (his own).

After talking to the mother, the escrow officer acted fast. She contacted the bank and was successful in putting a hold on the money. She is now working closely with the bank to have the funds returned to the mother.

This story and many others just like it prompted the issuance of escrow technical memorandum number 78-2008 – Protecting Our Trust Accounts. The below portion of the technical memorandum specifically addresses wire fraud.

The best defense against wire fraud, and even mistakes, is to receive signed instructions from the party on whose behalf the Company is wiring funds. The above wiring instructions provide all the information and authorization necessary to process an outgoing wire transfer. Make sure to double-check the wire order against the information provided by the party.

It is also important the Company receives instructions direct from the party (lender, buyer, borrower or seller). If a wire comes in and matches one of the account numbers, the bank will credit that account and not cross reference the names on the account. This could make it very easy for funds to be misdirected by someone who has less than honorable intentions. The Company has been made aware of instances where our Wire-Transfer Instruction was altered by someone who delivered the form on behalf of a borrower or seller. If the outgoing instructions are not received directly from the party, call to verify the information provided. A simple phone call can save a lot of time and anxiety later.

Being aware of these schemes and looking at a few pieces of crucial information takes very little time but can help prevent fraud from wreaking havoc on the Company's trust account. Should you have any questions regarding the content of this memorandum, please contact the Escrow Settlement Administration team for further instruction at 888.934.3354 or settlement@fnf.com.

The Importance of Knowing Your Notary Laws

It happened in a small town where everyone knows each other. Three separate escrow officers had their notary commissions revoked by the state for not adhering to the specific statutes. These escrow officers all worked with the same customer – a small trusted home builder comprised of a husband and wife team.

What happened? A husband and wife built homes and closed transactions with three unrelated escrow officers during an extended period of time. They became familiar with the escrow officers and the escrow officers trusted the couple in return. Things took an ugly turn when the husband and wife went through a divorce.

Somewhere along the way, the husband became very bitter and reported all three escrow officers to the Secretary of State for violations of their notary commission. The Secretary of State conducted a thorough investigation and found that all three notaries/escrow officers failed to comply with the state's statutes and revoked all three notary's commissions.

What mistakes were made? Two of the escrow officers failed to keep proper journal entries. In their particular state of Arizona, the statutes require a notary to list a journal entry every time the notary notarizes someone's signature. If it is someone whose signature is notarized frequently, they only have to request proper identification and have them sign the notary's journal every six months. However, every document notarized for that person must be entered into the notary's journal. Not one of the escrow officers or notaries did that. Their notary commissions were revoked.

The third escrow officer was cited for knowingly notarizing a false statement. The document she notarized only required one of the seller's signatures. Her escrow processing system automatically pulled the husband's name onto the form, yet the wife signed it. The revocation letter issued by the Secretary of State read: "The jurat indicates the signature of Seller/Agent HUSBAND was subscribed and sworn before the notary. However the signature actually on the form was that of the wife." The Secretary of State found that the notary notarized a false statement and did not meet the standards of the law. The findings resulted in the revocation of the escrow officer's notary commission – she lost her commission based on one document!

The problem in this case was a complaint was filed, and "we've always done it that way" is not a defense. It certainly didn't help these notaries.

What are the lessons to be learned? Know your notary statutes. Notary statutes vary from one state to another. Don't let your guard down with anyone. These were long-time customers of all three of these escrow officers. The escrow officers became lax with the requirements because they were comfortable with the couple. When the couple went through their divorce it seems the husband was so angry he decided to take it out on everyone he could and he succeeded.

Here are some other tips:

• Ensure your current address and contact information is on file with your state.
• Familiarize yourself with your state's statutes/rules and follow them completely.
• A notary's commission carries personal liability.
• Don't let your guard down, even if you are performing a notorial service on your personal time.
• The Company cannot override notary laws. If the identification presented doesn't meet the state requirements, do not accept it.
• If requested to provide proof of a journal entry, ensure you only provide the actual entry requested and not the entire page. The remaining entries on the page should be hidden.
• If you ever receive notice you are being investigated, immediately bring it to your management's attention. Make sure you respond within the required time frame.

If you are studying for your notary exam for the first time, or renewing your notary and studying for the exam for the first time in a long time, you can test your retention of your state's notary laws by taking an online quiz. The escrow administrators have created online quizzes for ten states. They are available on the Company's intranet under "Business Tools" by selecting "Escrow Administration" then "Training and Escrow Training Modules."

If you do not have access to the Company's intranet, we would be happy to send you a CD Rom of your state's notary quiz. Send your CD requests to us at settlement@fnf.com.

Fidelity National Financial has teamed with the National Notary Association (NNA) to make the job of notary simple and worry-free! We've worked with the NNA to preselect all the notary supplies you will need. You'll receive everything required by law plus items to make your duties easier. And there's no prepayment required on your part. Once your manager approves the application/order, your company will be billed directly. To apply for a notary commission or renew your notary, visit our joint Web site located on the Company's intranet under the Escrow Administration page and select "Notary Information."

Car Burglary Results in Stolen Escrow Files

Yikes! An escrow officer took files home to work on and had them stolen out of her car. The files contained personal information about the principals, including loan applications.

Recently one of our escrow officers had a 5 p.m. doctor's appointment, prompting her to leave the office early. She had just received two sets of loan documents, prior to leaving, which she took home in order to work-up so the signings could take place the following day.

While at the doctor's office someone smashed the back window out of the escrow officer's car and stole the rolling computer bag containing the files she had taken home to work on. These are the steps she took to notify and protect the consumers' private information contained in those files:

• Filed a police report, so if the files were recovered, the local police would know where to return the stolen property.
• Notified National Escrow Administration at settlement@fnf.com.
• Notified the Chief Compliance Officer who sent a Notice of Breach to each consumer detailing the event.
• Provided the consumers with a free year of Credit Check^® Basic Credit Monitoring from Experian^® – the consumers will be immediately notified if their identity is compromised.
• Recreated the escrow file from scratch, including the order of new payoff statements, Homeowners Association demands and lien release information.

We view privacy and security of our customer information as a very serious matter and are committed to appropriate measures to protect our customers' personal information. As such, the Company has instituted the following process for working on files outside of the office:

• Original escrow files and their contents can not be removed from the office. If a settlement employee needs to work on a file outside of the office, only the documents needed to work up the file may be copied and removed from the office.
• Settlement employees should treat non-public financial documents as if they contained their own private information. If a signing appointment is scheduled outside the office, only the documents needed for the signing may be removed from the office, not the entire escrow file. Carefully consider the security of the documents when making arrangements for delivery to a mobile notary. Duplicates of the documents must be easily available if a replacement is needed.
• If the employee is working from a personal home computer, the employee is not permitted to download or save any non-public consumer information to the workstation.
• Employees must shred any documents or information printed from their home computer. They can not throw away documents containing non-public information.

This policy was conveyed through escrow technical memorandum numbered 101-2009. If you did not receive the memo, it is available along with other previously issued memos and bulletins in the escrow administrator's library, on the Company's intranet. If you have questions regarding this new policy, or would like to request a copy, contact your escrow administrators at settlement@fnf.com or 949.622.4425.