By Lisa A. Tyler
National Escrow Administrator
Previous editions of Fraud Insights included stories about a common thread in high–risk transactions — the release of funds prior to close of escrow. These articles were:
In those stories the purchase and sale agreement contained instructions for the escrow holder to release funds prior to close of escrow upon receipt of the buyer's authorization, which would occur after he supposedly completed his due diligence on the property.
The agreement contained a legitimate property owner's name as the seller and a legitimate property address. However, the property owner had no idea his name and address were being used to perpetrate a scam. In all instances, the seller did not even have his property listed for sale!
Spoiler alert! This current story has a happy ending due to the intestinal fortitude of the escrow officer who opened the order. Read "AUTHORIZATION to release escrow funds" to find out how a busy escrow officer thwarted a crime and saved the Company from a $69,900 loss.
Would you freak out if a tenant showed up at your property to move in, when the property was not even available to rent? Read "ONLINE rental scams" to find out how to protect you and your property from the latest scam involving the online advertisement of property for rent utilizing someone else's property. If only these scammers would use their power for good, instead of evil!
The changes in how residential loans are originated and closed, became effective this month on October 3, 2015. However, it is likely you have yet to close a transaction with the new Closing Disclosure form. That is because the Consumer Financial Protection Bureau (CFPB) rule allowed lenders to use the new forms on loan applications taken on or after October 3, 2015. Those loans will not likely close for 45–60 days.
In the meantime, settlement agents will continue to close out loans in the lender's pipeline using the HUD–1 form of settlement statement. While settlement agents continue to wait to feel the tremendous effects of the changes, it is important to continue to educate yourself and your customers. Read "DELIVERY, waiting and rescission periods" to discover how the new rules and forms will slow down the lending cycle. Markets used to a 30 day close should now plan on a 45 day close. It is important to start setting expectations with real estate agents, buyers and sellers now, so new contracts are negotiated with a more realistic close date.
Be sure to answer the monthly CFPB question to make certain you understand the effects of the new rules and forms in your market area!