The Importance of Good Escrow Account Practices
Compliance. Fraud. Audits. These can be heavy words but also some inherent risks of the title and closing business. One of the best ways to overcome these hurdles is with smart escrow account practices. Pillar #2 of the ALTA Best Practices states that agents are to:
Adopt and maintain appropriate written procedures and controls for escrow trust accounts, allowing for electronic verification of reconciliation.
Between new and existing laws, plus regulations set by the Consumer Financial Protection Bureau, demands on title agents and their practices are higher than ever. So, what does this mean and how do we tackle it?
Document Your Procedures and Controls
Create written documents for procedures and checklists for controls. This can include outlining each procedure for consumer funds, determining internal review frequency, completing internal audits and documenting all findings and resolutions.
Avoid Fraud and Security Risks
This can include utilizing Positive Pay, setting up verification and approval processes for ACH and wires. Make sure that authorized approval employees are not preparing the reconciliation. This can also include background and credit checks for any team member conducting these duties.
Establish Proper Controls
Verify that operating accounts and trust accounts are separate and properly identified on all documentation.
Prepare training documentation and schedule to verify staff understand the importance of these duties
Does this sound like a lot to take on? That’s because it is! As overwhelming as it may seem, the importance of maintaining these escrow account practices cannot be overstated. Luckily, E-Closing offers reconciliation services to lighten that load and save you time so you can focus on your consumers and transactions.
Highly trained specialists will electronically reconcile your escrow accounts and analyze reports to spot potential issues for you to review. The accounts are reconciled using the 3-way process and eliminates any concerns for separation of duties. E-Closing will then supply documentation and reports for your records and for audits.
We’re here for you! Contact us here and rest easier knowing your escrow accounts are in great hands!