Happy New Year! If this is 2019 then it must be the year that I step up to the responsibility of being the president of the California Escrow Association. Truthfully, I have been working on familiarizing myself with this position for the last half year but now I guess it is time to ramp it up and take the show on the road! Like a rainbow lollipop, my calendar is already a crazy whirl of different colors, one color each for to do lists, events, meetings, and conference calls. There is no color for vacation, however. I’ll be lucky just to get long holidays of
HAZARDS OF THE ESCROW DESK
What happens when the loan is sold?
We all know that loans get sold from one lender to another all the time. Normally, it is no big deal; the borrower just gets the notice and starts making payments to another lender. However, when the property is in escrow and being sold (or refinanced), a whole new set of problems come up. One of our Escrow Officers found out the consequences the hard way. At closing, the Seller’s existing loan was paid to the old lender and we were alerted only when this lender called and advised us, “Hey, we no longer have this loan.” Did we panic? Yes, we always panic when a large sum of money is sent to the wrong place. Was this resolved? Yes, but not immediately. We had to get the money back from the old lender, we had to get a new payoff statement from the new lender, and then we wired the money out again. All that took time. Meanwhile, the interest on this unpaid loan kept on adding up on a daily basis. 2 extra weeks of interest had to be paid by Seller. Was the Seller happy? No, definitely not. But if he had alerted us during the transaction that he had received notice that the loan was sold and payments were to be made to a new lender, we would not have had the panic attack and no extra interest had to be paid.
The moral of this story: When you have a transaction in escrow, communicate, communicate, communicate! Preferably directly to your Escrow Officer. Let him/her make the determination on how this affects your transaction. Telling the real estate agent does not mean that it will be transmitted to the Escrow Officer.
BEC ON THE LOOSE!
Business Email Compromise (BEC) happens when hackers pretending to be a company’s top executive sends emails to those in charge of funds requesting the transfer of such funds to an outside account. The mortgage banking industry has been hit by a Nigerian based hacker group according to this industry article. We in the escrow industry already know to be extremely careful, it is time that the executives of other financial industry players also realize that they are not immune to having their emails hacked. Unfortunately, all it takes is a little homework by the fraudsters by using the search engines, bringing up the company website and looking at who are the important people featured on it.
WAIT, WHO’S CALLING?
Taking scamming to an even higher level, there is now a “SpoofCard” . To explain, a Spoof Card allows the person who is using it to change his phone number so that the recipient of the call thinks it is from someone else. Who the heck invents these things and why would they do so to begin with?
Wire fraud issues has had our industry in a tizzy, we are all so scared of wiring out that no outgoing wire is sent unless we have physically called the recipient and confirmed their wire instructions. Many times we can only leave a message and wait for the recipient to call us back. Now, using this “SpoofCard” fraudsters can pretend to be that recipient by faking the call in to us and then verifying or changing the wire instructions, right? How do we know this is not our client calling us but a hacker who managed to change the call in number? Is there nothing sacred anymore? Here is the full article alert from the American Land Title Association (ALTA) which explains how this SpoofCard works.
The Department of Business Oversight (DBO) which regulates the independent escrow companies like us have advised us that in the last 3 years, there were 30 cyber attacks against escrow companies which scammed $3 million in funds. There were $250,000 in losses just the past 90 days alone. This may not sound like a lot, but these are just fraud attacks in which funds were lost and not recovered and which were actually reported to the Department. Those attacks in which no money was lost seldom get reported. The FBI, through their Crime Complaint Center (IC3) reported victim losses exceeding $1.4 billion in 2017. Out of that, the loss in Los Angeles County alone was $12 million. Here is the FBI report on the 2017 figures.
Well, now for the good news….
CFPB or BCFP or CFPB?-
Let’s talk government spending. Yes, yes, with the drama of the federal government shutdown you are probably wondering, what spending? Last year Acting Director of the Consumer Financial Protection Bureau, Mick Mulvaney, decided that he didn’t like the Bureau’s name so he wanted a name change to the “Bureau of Consumer Financial Protection” because, by golly, the new name would then proclaim what the agency does. Okay, so he is in charge and what he wants he gets, even if it will cost $300 million for the government, countless banks, lenders and other financial institutions vendors to rearrange the name, “just because”. Never mind that taking $9 to $19 million out from the Bureau’s budget would have cut out funds to handle the important stuff like complaints and investigations and oversight on behalf of consumers.
But lo and behold, the new Acting Director appointed late in 2018 – Kathy Kraninger – realized that a real stink was being raised by Elizabeth Warren and the Democrats and she very wisely put a stop to the change. Finally! An adult in the room! So now this agency will go back to being the CFPB. Yes! We are happy because, doggone it, after saying “CFPB” for the last 7 years, who could even remember how the letters got juggled around? The name controversy took away the real reason why this agency was created. You go, Kathy! Article.
WELLS FARGO SETTLEMENT NEWS
Remember how Wells Fargo opened up millions of fake accounts, charged mortgage rate locks to certain customers and not to others, and forced auto insurance on customers when not needed? Remember all the terrible things they did to their customers in the name of profit? Well, here is some good news. Finally there is some closure for this institution. Not only did they settle with the CFPB for $1 billion, they also settled with the attorney generals of all 50 states for $575 million. Hopefully, this is it. Now all they have to do is dig into their profits for the foreseeable future. Yeah, happy new year. Do they have more lawsuits pending? Was all this worth the $1.5 billion that they have to shell out? What an expensive lesson to learn.
ZILLOW – NEW ENTRY INTO THE FLIPPING MARKET
If I need a value comparison, I go to Zillow and draw some comp data. I do this, the consumers do this, the real estate community does this. The company has built their brand and has always been the go-to source for property value comparisons. Now, the company has redefined and added to their brand and products and are actually getting into the resale property market business. They buy properties directly from sellers, fix them up if needed and then sell them to the Buyers. Seen that? Done that? For the last few decades we have been calling this process “flipping”. To further the brand they have recently purchased a mortgage company (do loans!) and have gone into partnerships with bigger real estate brokerage houses (sell more homes!). It’s just a matter of time before they buy a title company and an escrow company. Taking one stop shopping for the consumer to the next level in order to survive the market downward trend..
A LOOK AT WHO ELSE IS INVESTING IN “AFFORDABLE” HOUSING
We all know the Bay area and Silicon Valley is known for its lack of affordable housing, all because when tech companies moved in house values went stratospheric. Unless you are one of the lucky ones who were already situated, the whole area became totally unaffordable to those who were starting out or in a different industry. It looks like some of the tech companies are now trying to do something about it. According to this article, LinkedIn, Cisco, and others have invested in a fund that aims to “create 10,000 affordable housing opportunities in the first 10 years”. Well, yay, it is about time the tech companies become a part of the solution instead of the cause.
By the way, “affordable housing” is a subjective term that is defined by the location and the wallet. What is affordable in one area could be outrageous in another. I spent the Christmas holidays up north talking to friends and family regarding “affordable housing” and OUCH. How can a person survive when rent is 60% of the net monthly take home pay?
More surprising stories on housing development (on an unaffordable level) from …. ASTON MARTIN … yes the million-dollar-per-car carmaker is taking its exclusivity straight to your home and building luxury condominiums in Miami. So maybe you can’t own an Aston Martin Vanquish, but maybe you could own an Aston Martin Residence!
and PORSCHE! Again, perhaps not quite “affordable” to you and me, but how can you resist bragging that you can take your car in an elevator right to your apartment … Check out the video in the link. Right. Affordability, again, is in the type of wallet you own.
Contrary to Monopoly for Millennials, a game which I bought for my Millennial nieces and nephews, there are those under 35 who are actually buying homes instead of being totally priced out. Some markets are good for them, according to this article like Salt Lake City, Minneapolis and Pittsburgh. Perhaps not the choicest cities with the most job opportunities, but still, an indication that in some parts of the nation, this is not the lost generation after all.
AND WHERE DID YOU SAY YOU WERE FROM?
A few years ago the New York Times published an interactive survey that supposedly can pinpoint where you originally come from in the U.S., all by the way you talk. I said, “Oh yeah? Let’s see if this quiz works for many of us, we are a combination of different parts of the country. Lo and behold, the quiz was right! I am more a product of my immediate environment than I thought. Take the quiz here.
GOLDEN STATE WARRIORS NEWS
I am a transplanted Californian so I am always interested in what is happening in my state. This tidbit is for my brother and his family, avid fans of all things Curry (not the food, please) and that ball team he belongs to.
Jerry, would you like to get a $100 per month access pass to Oracle for the GSW games? You can’t see them play but you get to mingle with the crowds, hobnob with the fans, eat the bar food, hear the crowds roar. What say you?
FUNNY FOR THE MONTH:
A retired guy sits around the house all day so one day his wife says, “Jay, could you do something useful like vacuum the house once a week?”
The guy gives it a moment’s thought and says; “Sure; why not. Where’s the vacuum?”
Half an hour later, Jay walks into the kitchen to get some coffee.
His wife says, “I didn’t hear the vacuum running; I thought you were going to use it.”
Exasperated, Jay answers, “The stupid thing is broken, and it won’t start. We need to buy a new one!”
“Really?” she says, “Show me – it worked fine the last time I used it.”
So, he showed her:
Look familiar? Own up! Own up! Been there done that!
Looking forward to a great 2019 year with you! Let’s see what the year will hold!