Can The Title Company Keep My Money?

Refinanced mortgage in 2004. Funds withheld to pay creditors. Creditors not paid. Is it too late to recoup funds from title company? Some creditors are no longer in business. Can title company keep funds?

Here is my opinion...

First, the title company has a duty to disburse the proceeds in accordance with the settlement statement. If the settlement statement showed the funds to be paid to the creditor, the creditor should have been paid.

Second, assuming that the title company was unable to pay the creditor for some reason, the title company has a duty to return the funds to the person from whom they were withheld. Those funds do not belong to the title company.

Third, if the money cannot be paid to the creditor, and they are not able to locate the person from whom they were withheld, the funds are "unclaimed" if they are not claimed within a certain time period. In Ohio, we have a Division of Unclaimed Funds and title companies are required to turn over any unclaimed funds to it. The Division of Unclaimed funds then uses the funds and interest it generates to support public programs and in the even that the owner of the funds makes a claim, they will turn it over to them.

I don't know what other states do, but I imagine they have something similar set up.

My advice in this situation would be to contact the title company and ask for the money. They should be able to track it down; they either paid it to the creditor and it didn't get properly applied, they are still holding it, or it was turned over to a state agency. In any regard the title company should be able to return it, or point you in the right direction.

Regardless, I do not think that the title company has any right to keep the money.

I would be interested to hear other opinions. How do you, or your state, handle unclaimed funds?

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com

Source of Title Blog ::

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Categories: Escrow/Funding

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	First the obvious: Why would anyone...
	First the obvious: Why would anyone wait 3 years to see if their accounts had been paid off? The longer you wait to clear something like this up, the harder it is to do. As for the question – this is one of the little-known nightmares that title agents suffer. I check goes missing and hours and hours are consumed tracking it down. Part of the cost of the title business, but the title agent gets no credit or acknowledgement for the effort. You are basically correct on the process. The only variation is that many times the lender’s closing instructions specify that specific creditors be paid specific amounts. In those cases where we can’t find the creditor or the amount was incorrect, we try to avoid adding it to the settlement sheet. After closing, we obtain concurrence from the lender to return the funds to the borrower. NOTE TO BORROWERS: If you don’t agree with something on the settlement sheet, don’t sign it. Try to get it fixed before you walk away from the table. Fixing it after the fact is much harder for everyone. In PA title agents are not allowed to retain settlement funds. Any funds over a year old are to be turned over to the state. (there is some variation, PA Agents should check the PA Dept. of State web site for the process and timelines) If undisbursed funds are discovered during a state audit, fines are assessed. We reconcile regularly (just like TCS) to make sure that the checks have been cashed. If they go too long without being cashed, we attempt to contact the parties to remedy the situation. The title agent in the above question should have contacted the borrower long ago. But before we jump on the poor Title Agent, there's a chance that they sent the check, it was cashed, but the funds were misapplied or “lost” by the creditor. I've see it happen a number of times. The correct course of action its to call the title agent and find out if a check was cut. If it wasn’t – find out why and ask for the funds to be sent to you. If it was cut, find out if it was cashed. If cashed, ask for a copy of the front and back for your records. A good title agent will be willing to help the borrower unravel the mystery.
	by Dave Wirsching \| 2007/05/18 \| log in or register to post a reply

	I agree, why did it go for 3 yrs.? ...
	I agree, why did it go for 3 yrs.? In Pennsylvania we have a 5 yr escheat statute. I would have insisted that the debtor produce an appropriate statement from the creditor. If this was not produced within a reasonable window (2-3 months) I would advise debtor that funds would be handed over to lender for their disposition. I'm out of playing field.
	by edward \| 2007/05/18 \| log in or register to post a reply

	This is an ongoing problem for titl...
	This is an ongoing problem for title agents. After years of doing massive quantities of work without extra pay, we've finally reduced it to a system. First, to avoid potential fraud, we will not pay anything out of closing that is not a lien or required by a lender. Many fraud schemes are enabled by title agents paying funds to third parties. If a lender wants personal debt paid out of closing, we have a strict disclosure. The lender and the borrower must agree to the amount and payee. The borrower has the option of taking the checks [payable to the creditors] and sending them to the creditors themselves. If not, THEY must provide statements or invoices to accompany the checks. We NEVER get involved in obtaining payoff figures for personal debt. The disclosure clearly says we are responsible only for cutting a check and if applicable, sending the check. We do NO follow up to make sure an account in paid in full. The disclosure also says we will charge $10 per check if the borrower wants the check re-written after closing. If a customer needs a copy of the cancelled check to resolve a dispute over payment, we provide that at no extra cost. Now, the really big problem is that lots of personal debt checks remain uncashed. I don't want to waste my time so I presume the borrower is not allowed access to the funds. Our checks say "void after 120 days". After 120 days, I stop payment on the check, charge a $25 fee for extra work, then if there is money left, I leave the money sit in the escrow account until the next escheat report is sent to Harrisburg. The money is escheated with the creditor as the owner. So if the money was owed to IC Systems, they can pick up the cash through the unclaimed property system. We are not paid to process personal debt. BTW, this is a great topic.
	by Diane Cipa \| 2007/05/20 \| log in or register to post a reply

	Dittos to eveything said. This wil...
	Dittos to eveything said. This will sound sick (to anybody but a title agent), but one of the happiest days of my life was day I got the phone number of an infamous lender's central scrutinizer for approving re-cuts. Lenders tend to not make these people accessible, but I found her. This particular lender did a lot of debt consolidation refis, and from what I found out, informally trained its l/o's to tell customers - at the last minute - that, while they didn't qualify for a cash-out refi, they could hold the debt consolidation checks and then ask the title company to re-cut them back in the borrowers' names. This lender happened to have a VP who was a former title agent who I got to know pretty well. In one call, I asked him, "by the way, I have one of your customers who seems to have a paid account, but they can't really prove it. Do you know somebody I can have them call?" He told the person. I was free!!!! The calls on these stopped virtually immediately, but these l/o's ended up having some do some splainin' - particularly about how what they sold their customers was as good as cash out.
	by John Povejsil \| 2007/05/20 \| log in or register to post a reply

	The title agent/company may have in...
	The title agent/company may have insured without exception to the liens and without being able to locate the creditor may be holding the funds for the statutory period for the liens to make sure that if a claim is filed they can pay same. At the end of the statutory period the funds should be returned to the client.
	by sycamore \| 2007/05/21 \| log in or register to post a reply

	I may be mistaken, but I believe ou...
	I may be mistaken, but I believe our comments are addressing non-secured personal debts, unrelated to the title of the property. If a mortgage lender instructs a title agent to pay personal debts on the HUD, we truly shouldn't return those funds to the borrowers without lender approval.
	by Diane Cipa \| 2007/05/21 \| log in or register to post a reply

	I think closing agents need to push...
	I think closing agents need to push back BEFORE we get saddled with a check that we know can not be sent or cashed. Lenders often instruct us to pay XYZ collection. No address, no account number. When the consumer is asked he doesn't know a thing about it. We tell the lender we cannot reasonably be expected to comply with that instruction...sometimes they change their instruction or supply more information. (If it's off a credit report, they do have more information)
	by Nancy Steffen \| 2007/06/05 \| log in or register to post a reply

Source of Title Blog

Robert A. Franco The focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

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