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Escrow Industry Update

Licensing Updates

Number of licenses:

License Types	Count as of October 2012	Count as of October 2011
Main Office	91	97
Branch Office	12	14
Officers	214	259

Renewals for Escrow Agents

Escrow Agent Company renewals are coming! Watch for a renewal notice by mid November. If you don’t receive your renewal notice, you are still required to submit your renewal fee by December 31, 2012. Failure to submit the fee and any required accompanying documentation by December 31, 2012 will result in the expiration of your license, interruption of your business, and a late fee. Below is a reminder of some of the key items that must be current in order for DFI to complete your renewal.

• The Designated Escrow Officer (DEO) license must be current.
• All required quarterly reports must have been received.
• The E&O, Fidelity, and Surety bond, if applicable, must all be current.
• Company information (address, DEO, ownership) must be current. You must submit amendments and all accompanying paperwork for any company/DEO changes if you have not already.

In addition, DFI revised the trust account form (Certificate of Compliance and Authorization to Examine Trust Accounts) and requires the submission of a new form again this year at the time of renewal. Please allot a little extra time for you and your bank to correctly complete this form.

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Licensing Tip - Change in Designated Escrow Officer (DEO)

A change in DEO can be a challenging experience for a company, whether it is for a main office or a branch. While we understand personnel changes can be chaotic, DFI treats changes of DEOs seriously and it is important that a company remains in compliance during personnel transitions. Below are some key points regarding a change in DEO:

• You must apply to DFI for approval of a new DEO before the existing DEO leaves. The new DEO must meet the necessary requirements in order to be approved, see WAC 208-680-176. Please plan for enough time for DFI to review the change of DEO.
  • If you intend to replace the outgoing DEO with another existing licensed escrow officer, DFI can usually process that type of amendment within 3 days of receipt of completed paperwork*
  • If you intend to replace the outgoing DEO with a new applicant who is not yet licensed as an escrow officer, DFI can usually process a new application within 2 weeks of receipt of a completed application*
• You must submit paperwork that is signed by both the outgoing DEO and the incoming DEO that verifies the trust account balance and the transfer of responsibility of the trust account.
• You may not accept new clients or new files until the proposed DEO has been approved by DFI or DFI has otherwise authorized new activities, see WAC 208-680-176.

* Processing times can vary. Submitting a complete application from the start will help us process the application more quickly. Another area that often requires additional review and time is the individual’s financial fitness and credit report. If an individual has financial issues, be prepared to submit clear explanations and documentation regarding the issues to help DFI review them as quickly as possible.

So, what happens if your DEO leaves suddenly, you aren’t able to get all of the required paperwork filled out completely, and you have no replacement? Communication with DFI is key. WAC 208-680-176 has specific guidelines and timeframes for notification. DFI may try to work with you to find acceptable alternatives to the required paperwork or timeframes. However, if you fail to notify DFI, you will automatically be out of compliance. Extensions or consideration of unique circumstances must go through an approval process and timely notification is your ally.

One final note. . . .Plan ahead. Consider creating a succession plan within your business. Consider the following questions that may help you deal with expected and unexpected changes of DEO.

• If you lost your DEO today, what would you do?
• Are you prepared to stop taking new clients?
• What is your plan to make sure that consumers are still protected and that any funds in the trust account are properly managed?
• Do you know anybody who can replace your DEO?
• If you have a replacement in line but they are not yet licensed, do they have the knowledge they need to pass the escrow test?
• What is your plan if they fail the test, causing additional delays to the application process?
• Do you understand the actions required to avoid compliance issues that could potentially lead to enforcement action against you, including fines?

Our goal is to help you be successful while maintaining consumer protection. If you have any questions, please contact Ariana Wood awood@dfi.wa.gov or Dawn Woolery dwoolery@dfi.wa.gov.

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Examination Update

None at this time.