Washington State Department of Financial Institutions

Escrow Agent Alert 00-02 ES

DATE: March 30, 2000

TO: All Escrow Agents, owners, and Escrow Officers

FROM: Mark Thomson, Director of Division of Consumer Services

SUBJECT: Closure of Escrow Agents for lack of Trust Account Reconciliation

The Escrow Agent Registration Act (Chapter 18.44 RCW) and good business practices, dictate that your trust accounts should be reconciled monthly. Although the majority of escrow companies reconcile accounts regularly, a few do not. In the past, the Department of Financial Institutions (DFI) has worked with the few escrow companies we find failing to regularly and properly reconcile accounts, usually by granting them timeframes in which to reconcile and bring the accounts current.

Recent and continued examples of poorly managed escrow companies, and worse yet where criminal activity has taken place, has forced DFI to adopt a zero tolerance policy on reconcilements. Escrow companies failing to reconcile accounts each month will be ordered to cease accepting new business until such time that they can demonstrate that the trust account has been reconciled and that all exceptions have been cleared. Failure to reconcile puts the public at risk and therefore endangers the license of both the designated escrow officer and the escrow agent.

DFI will continue to monitor the internal routines and controls of licensed escrow agents through the examination process. These are the keys to ensuring the public’s interests are safe and properly managed in escrow agent trust funds.