Loan Broker - become a escrow agent?

[seho]

Hi, I was wondering if a Loan broker can serve as an escrow agent or establish an escrow company for in junction with the Loan brokerage for existing clients. ie. People using brokers to refinancing their homes.

Can anyone provide me with some details? and if it is possible, how would one start offering escrow services. (requirements etc.)

Thanks

[Pat Garcia]

If you are a Licensed Real Estate Broker, you are exempt from the California Escrow Law. This means you can do Escrow. If you do this you must comply with any Department of Real-Estate rules and regulations concerning Escrow.

That being said, I would advise that you find a good Licensed “Independent” Escrow Company and use them instead. You will save yourself a lot of headache and sorrow in the long run.

Doing your own Escrows is a contradiction in terms.

Pat Garcia
Beach Pacific Escrow

[seho]

Thanks for the reply.

I did look up the escrow law's and re commissioner regulations. I am not sure how to interpret some of the wordings in the escrow law regulations such as
"Any broker licensed by the RE comissioner while performing acts in the course of or incidental to a RE transaction in which the broker is an agent or a party to the transaction and in which the broker is performing an act for which a RE license is required."

Does that mean a broker can provide escrow not limited to a sales transaction? Reason I am looking into this is for the purpose of providing escrow services to clients undergoing refinance. As there is no other consumer party involved. I have spoke to someone about this and their answer was only if you are the seller's broker, you are able to do escrow.

If this is possible, does the broker need some type of bonds, report to the dept of RE. etc. I have not obtained any other information besides the financial code and commisioner regulations regarding this topic.

[Pat Garcia]

seho;

I am a Licensed Escrow Company. I have to follow the rules under the California Escrow Law as follows.

The Escrow Law is contained in Division 6 of the California Financial Code, commencing with Section 17000. The regulations are contained in Subchapter 9, Title 10 of the California Code of Regulations commencing with Section 1700 (10 C.C.R. § 1700, et seq.).

If you are practicing Escrow under your Real Estate Brokers License you are exempt from the above. If you plan on practicing Escrow under your Real Estate Brokers License (I advise against this) you could probably check the Department of Real Estate for advice and guidance. Practicing Escrow under a Real Estate Brokers License is not my area of expertise. I really can’t comment on that specifically, I don’t know what the rules are. Sorry I can’t be of more help in this regard.

It is my opinion that Real Estate Brokers should not be doing Escrow, they are not qualified.

Is there a reason you don’t want to use a Licensed Escrow Company?

Pat Garcia
Beach Pacific Escrow

[seho]

We currently use independent escrow services and plan to continue using them for purchase transactions; however for refinancing situations, we believe escrow can be done in a more timely manner if it was done inhouse. If this plan is to work out, we do plan on hiring a experienced escrow officer or manager to help handle the escrow processes, since we are not experienced with escrow. as you have said, and I totally agree.

[Pat Garcia]

Seho;

Usually, in a normal market Refinances would take a back seat to Sales at an Escrow Company. This is not the case with all Escrow Companies by the way. But, in January 2008 and for the foreseeable future you should be able to find many competent Licensed Escrow Companies that would happy to process even refinance escrows, in a timely manor and with a great deal of expertise. If you’re present Escrow Company does not possess you Refinance Escrows “especially in today’s market” in a timely manor, then something is very wrong.

Pat Garcia
Beach Pacific Escrow