A Playground For Criminals

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Source of Title Blog

A Playground For Criminals
by Robert Franco | 2007/02/14 |

Sadly, there seems to be no end to the crime spree in the title industry. Unscrupulous employees embezzling funds from title companies, rogue escrow agents falsifying documents, dishonest agents stealing from their escrow accounts, and the list goes on. What is it that has created this playground for criminals?

Here are a few recent headlines:

State and federal officials are examining the actions of Barbara Haywood, a former employee of First American Title, whom they believe may have stolen at least $50,000 from her former employer.

A grand jury in Seattle, Washington indicted six people after they were linked to a massive identity theft scheme that used personal identifying information provided by employees of a mortgage company and escrow firm.

Norvel Brown, the former president of Mississippi Valley Title Company of St. Louis, Missouri, pled guilty on February 6, 2007 after admitting that he stole more than $3.2 million from his commercial escrow accounts and the Department of Housing and Urban Development (HUD).

Officials arrested Nina Rogers, a title company employee, for allegedly stealing more than $30,000 from ERA First Advantage of Newburgh, Indiana.

When I became a title agent, I was given instructions by my underwriter to take steps to help protect them, as well as myself, from some of these risks. Simple things like have 2 people review the disbursements, keep unused checks locked up, balance the escrow account every month, etc. Furthermore, I was told that my underwriter would audit my records every year. Perhaps once a year is not very often, but it serves as a warning that if you try to fudge your books, you will get caught.

I operate a very small office with only a few employees and I handle most of the escrow work myself. Still, I try to follow those procedures. I heard a story once about a title agent that kept the unused checks in her desk draw and one of her employees stole a few out of the middle of the stack. It went unnoticed for several months because (1) she didn't keep the checks locks up, and (2) she didn't balance her account regularly. You just can't be too careful when you are responsible for handling large amounts of other people's money.

Perhaps it is time to see more safety procedures put in place and more monitoring by the underwriters. It seems that most underwriters have a small staff that actually conducts audits and they are already overburdened trying to manage one audit per year for all of their agents. Isn't that something that could be easily outsourced? It seems that there would be plenty of work for a firm that specializes in conducting quarterly audits for the underwriters. With the amount of money we are talking about, it would be well worth the expense if it prevented just one theft.

But audits alone are not sufficient. Agents need more training on proper procedures so that they can implement better safety standards to protect the information they collect. Theft of information from escrow files can be just as damaging to customers and the title companies' reputation.

More training could also help escrow officers detect fraud in real estate transactions. Even if its not the title agent, or their employees, perpetrating the fraud, they are the best line of defense to protect the public from fraudulent transfers and mortgage fraud. With the high turn-over at a lot of title companies, fraud prevention and awareness training should be an ongoing process in every office.

It is time to re-evaluate the title industry's practices. The status quo is not working. Crime continues to run rampant in the industry and we need to devise new standards to protect ourselves, our customers, the public at large, and the integrity of the industry.

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

Source of Title Blog ::

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Categories: Fraudulent Transfers, Mortgage Fraud, Title Industry

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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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