Prevention Is a Top Priority
By Lisa A. Tyler
National Escrow Administrator
As claims awareness and prevention are a top priority for the Company, FNTG’s National Escrow Administrators are committed to providing an insightful and interesting newsletter that keeps our employees aware of fraud and forgery occurrences in our industry that result in claims and ultimately loss of revenue to the Company.
In addition to raising awareness, it is our goal to provide employees of FNTG with tips and tools that will aid in the detection and prevention of fraud. Through this new communication, Fraud Insights, we will provide improved processes and procedures for all operations to embrace.
Look for future announcements of monetary rewards to those employees that were able to thwart fraud in their own local areas of responsibility. Read more in this edition about how our employees followed their instincts and derailed fraudulent transactions and saved the day! Report heroic stories like these for your chance to receive a $500 reward.
We couldn’t wait until next month to bring you this first edition of Fraud Insights. Look for future editions in your e-mail box on the 15th of each month.
If someone in your office has passed this newsletter on to you and you are not on our mailing list, please let us know by sending your contact information to firstname.lastname@example.org.
If you have an incident of fraud or forgery that you would like to share in this newsletter, please pass on your article ideas to us at email@example.com. Not good at authoring? No worries, we will interview and write your article for you, just give us a call at (888) 934.3354. Want to remain anonymous? That is not an issue either, as we can provide an alias free of charge! So call or e-mail us today.
From Yamhill County Sheriff's Office
Editorial Comment: The customer mentioned in the letter of recognition below had made an offer to purchase a multimillion dollar piece of real estate in the Portland, Oregon area. The escrow officer on this transaction became suspicious of the customer when he was unable to produce his earnest money deposit in the amount of $1 million, due to a lost wire transfer and a multitude of other excuses for not producing the funds when due. The escrow officer’s suspicions grew when the buyer refused to complete an Identification Affidavit to clear items from the title report. To make matters worse, the customer had no identification other than a hurricane victim identification card, but had proceeded to purchase multiple vehicles in the area.
The escrow officer acted on her suspicions by calling the local Sheriff’s department to run the name of the customer. The run resulted in an immediate arrest of the customer and an unfortunate cancellation of the real estate transaction. The seller and both real estate agents in this matter were victimized and would have suffered a greater monetary loss, if the escrow officer had not acted on her suspicions.
December 27, 2005
Ticor Title Company
1629 SW Salmon
Portland , OR 97205
Dear Mr. Walker,
I would like to recognize Lydia Zimmerman and the staff of the McMinnville Ticor Title Company for outstanding community service. During the course of work, Lydia and her staff recognized that activities and comments made by a potential customer were suspicious. Lydia proceeded to report the suspicious behavior to the Yamhill County Sheriff’s Office, which revealed that the customer was wanted in the state of Louisiana for Federal Emergency Management Agency fraud and mail fraud.
In addition to being wanted in Louisiana, the customer had defrauded a Chevrolet dealership out of 16 new vehicles, taking possession of six, and was in the process of defrauding citizens of Yamhill County of rural property. If not for the awareness and quick action of Lydia and her staff, the customer potentially could have defrauded citizens of Yamhill County of an unknown amount of money.
Lydia and her staff are to be commended for their actions in preventing this fraud and serving Yamhill County and its citizens.
Jack H. Crabtree
Encl.–Certificate of Appreciation
cc: Lydia Zimmerman
The Adventures of Warren T. Deed, CSEO
By Danna Jo Rexroad, Arizona Escrow Administrator
Fidelity National Title in Tucson, Arizona
This is a true story from an escrow office in Maricopa County – only the names have been changed:
Warren T. Deed is a Certified Senior Escrow Officer with nearly 30 years of experience in the escrow industry, he has handled almost every kind of transaction. However, every now and then he is presented with a transaction that just doesn’t seem “right.”
Recently, Warren was contacted by a mortgage broker to get a commitment on a transaction involving a tenant who was exercising a lease with option to purchase. The purchase price of the property was $193,000. A few days later, the loan package came in showing a sale price of $330,000 and a new loan in the amount of $264,000. The bottom line on the HUD form showed the buyer was going to net over $72,000 from a purchase money loan!
Warren thought this was odd. So he called the lender and talked to Cathy Closer about the discrepancy in the sale price. Cathy said they were lending at the appraised value. Thinking all was well, Warren went on to close the buyer and return the loan package. He then sent out the seller’s documents for signature via overnight delivery. To help facilitate the closing, the buyer’s father paid the down payment of more than $9,000 required under the lease option. However, the receipt showed that the funds were paid by the buyer. In the meantime, the seller refused delivery of the closing documents and refused to close. Now everyone had an attorney and of course, the closing was delayed.
So what did we do in the meantime? First, we had to adjust the receipt to show the correct depositor of the down payment, correct the HUD form and get a Third Party Deposit Escrow Instruction form signed. Warren called Cathy Closer again and told her once again that the sale price was only $193,000, pointed out that the buyer would be pocketing over $72,000, and asked for amended loan closing instructions approving all of this. Warren also told Cathy that the down payment was not paid by the borrower.
Cathy didn’t seem to be catching on. After the conversation, Warren faxed a copy of the Lease Option Agreement, the HUD form, the corrected receipt and copy of the cashier’s check and the commitment directly to the lender (which should have been done after the first conversation with Cathy). Cathy finally saw the light and said, “I don’t think we can do this. We have to go back to underwriting.” Since closing was delayed, we didn’t know if the lender would lend less money or not offer the loan at all. But the lock had now expired.
We don’t know what information or documents were given to the lender by the mortgage broker, and we’re not trying to suggest that the mortgage broker did anything inappropriate. However, there was obviously some misinformation somewhere. The down payment of more than $9,000 may seem like a moot point since the buyer was netting over $72,000, but the receipt still needed to be correct and we still needed to make sure that the lender was aware that a deposit had been made by a third party on behalf of the borrower/buyer. The big red flag here was the erroneous sale price on the loan instructions and the buyer netting over $72,000 on a purchase money loan.
What’s the moral of this story? If you are an escrow officer, there are several:
- Always carefully read the lender’s instructions;
- Bring discrepancies to the lender’s attention - both verbally and in writing;
- Communicate directly with the lender;
- Send information directly to the lender;
- If the lender says “all is well” or verbally instructs you to close contrary to the written instructions, then the lender must send revised, written loan closing instructions before we can close;
- Pay attention when receipting in funds and show the receipt from the remitter, get Third Party Deposit Escrow Instructions and send copies of all documents to the lender.
We don’t know what is going to happen with this transaction. In the meantime, the Tenant/Buyer is still paying rent and the Landlord/Seller is still accepting the rent. The Buyer will most likely file suit for specific performance. A Lis Pendens (or notice of pending action) will be recorded against the property, tying up the Seller’s property for several months, if not longer.
Multi-state Felony Prevented by Chicago Title and Fidelity National Title Employees
By Pam Martin, Escrow Officer
Fidelity National Title in Santa Barbara, California
Here is a story of serious fraud and the resolution by a group of Chicago Title and Fidelity National Title employees working together.
An escrow officer at Fidelity National Title in Arizona called me recently, saying her selling real estate agent on an all-cash sale transaction told her their buyer was selling property in California under a different name and transferring the funds to her Arizona escrow.
After quick research this is what we had: one man using two names and in possession of two California driver licenses, each showing a different name. The birthdates on the licenses were the same month and day, but a year apart.
The sale escrow was in California at Chicago Title and the purchase escrow was in Arizona at Fidelity National Title. The seller proceeds were to transfer from sale to purchase. The listing agent in California and the selling agent in Arizona concluded that their mutual customer had multiple identities and called the escrow officer in Arizona for guidance on how to proceed with their transactions. She called National Escrow Administration.
After much discussion with the escrow officers and underwriting counsel, we collected copies of both California driver licenses and contacted a Department of Motor Vehicles (DMV) investigator. He said all he could do was initiate a criminal investigation to verify fingerprints, and that would take time. We asked him to please look at the pictures and tell us if he thought it was the same man. He agreed it appeared to be the same man and he opened a criminal investigation.
In the meantime, title was comparing the current signature of the California seller with existing trust deed signatures. The consensus was they were very different.
We presented J. Donald Cole, Chief Underwriting Counsel for FNTG, with facts we had collected and he responded with, “Based upon the information we have currently, we can not identify who our principals are based on the Patriot Act Rules. You are not to close these escrows.” So each escrow officer very carefully and effectively turned away both sales. The California seller at the Chicago Title office was very irate and threatened to contact his attorney.
Both transactions closed later but not with FNTG companies.
A few months later the DMV investigator called to say a warrant for arrest on our California seller/Arizona buyer had been issued because it is a felony to commit forgery while obtaining a California driver’s license. He also said the man was a convicted pedophile who had already done hard time. Good reason to want to change your name and move.
The group involved in solving this case is: Priscilla Callinan, Escrow Manager for Fidelity National Title in Flagstaff, Arizona; Marnie Kennedy, Escrow Officer for Chicago Title Company in Palmdale, California; John Hummer, Underwriter for Chicago Title Insurance Company in Los Angeles, California; Stephen Anderson, Underwriting Counsel for Fidelity National Title’s Western Division; J. Donald Cole, Chief Underwriting Counsel for FNTG; and Pam Martin, Escrow Officer for Fidelity National Title in Santa Barbara, California.