Escrow Institute of California - P.O. Box 1069 - Carlsbad, California 92018-1069Phone: (760) 633-4342 - Fax: (760) 942-1048 - Toll Free: 1 (800) 3-ESCROW
Lender Vetting of Escrow Holders: Who Do Our Members Work For?
The Escrow Institute of California (EIC) is the professional trade association which represents CaliforniaDepartment of Corporations licensed escrow holders. The California Department of Corporations currentlylicenses 965 locations throughout the state where more than 6,100 people are employed. California consistentlytops the chart in loan origination volume; originating a larger loan volume than the next 4 highest volume states.Our members are licensed by the California Department of Corporations (DOC) under a regulatory authority thathas existed since 1947. Our members are extremely well regulated. Owners and their employees are subject tostate and federal criminal background checks and are required to carry surety and fidelity bonds. All licensees aresubject to annual CPA audits with mandated reporting to DOC by the CPA and are also subject to mandatedregular compliance audits by the DOC and “for cause” audits by both DOC and Escrow Agent’s FidelityCorporation, which is the statutory bonding body for licensees. These requirements are designed to protect theconsumer from illegal acts, errors and trust shortages for the sole purpose of providing reliable Escrow Servicesfor California Consumers.THE CORE ISSUES:Settlement Services in the United States are practiced in forms and manners that vary, not only from state tostate, but from county to county and even city to city. Consolidation in the Banking and Mortgage Lendingindustries have accelerated the ongoing process of disconnect between the wants, needs and desires of thosemaking mortgage loans with the those of consumers and of settlement service providers. The ever increasingregulation of mortgage lending related industries by the Federal Government coupled with that consolidation,have furthered an East Coast Centric view of the entire process, creating conflicts of interest and duties.Like its predecessors, in implementing RESPA and various lending acts, the Consumer Financial ProtectionBureau (CFPB), seems to make no effective distinction in its collective mind between title insurance and escrow(settlement/closing) services for covered transactions; literally viewing them as the same product or service. Titleinsurance is an insurance product and is not interchangeable with the service of acting as an escrow agent and/orsettling and disbursing a transaction. Confusion arises because of the dual role title insurance companiesassume in many states. Regardless, they are separate and distinct products and services.In issuing CFPB Bulletin 2012-03, we do not believe the Bureau intended to take the unreasonable position thatlenders should be made into
of title insurers and escrow service providers. Particularly in lightof the fact that these services are both routinely selected by sellers and buyers during the negotiation of theircontract; and have value to consumers outside of the loan product, as demonstrated by the routine use of theseproducts and services in cash transactions. Nor do we believe the CFPB realized that their bulletin would beused by private sector entrepreneurs to convince lenders they had such a responsibility, in order to sell theirhighly provocative and unregulated “vetting” services.The Secure Settlements Inc. (SSI) model is a prime example of what we believe to be such an unintendedconsequence. Secure Settlements, Inc. represents that it relies on the Dodd-Frank Wall Street Reform andConsumer Protection Act (Pub.L. 111-203,H.R. 4173) (the "Dodd-Frank Act") in promulgating the alleged
necessity of its “vetting” assistance and collection of personal and confidential information from settlementservices personnel and companies. EIC disputes this position and postulates the Dodd-Frank Act neversupposed that unregulated “vetting” companies such as Secure Settlements, Inc. would rise from the depths ofthe law to create millionaire collectors of personal and confidential information on escrow/settlementprofessionals.This point aside, Secure Settlements, Inc. is completely unregulated and has no reasonable need, legal authorityor requirement to collect individuals’ and corporations’ personal and confidential information. The information itproposes to amass from thousands of persons across the United States includes their social security numbers,corporate identifying numbers, credit reports and concomitant information including residence addresses, which