When you’re buying a home all of your documents and more importantly your funds are held with an escrow company. In the state of California escrow can be held by 2 types of escrow companies; Controlled and Licensed.
A Controlled Escrow firm can be a real estate broker, mortgage broker or a bank. They can legally hold your funds until the time of distribution.
A Licensed Escrow firm is in the business of escrow. The stringent requirements by the Department of Business Oversight assure that every licensed escrow company has met the highest standards of the industry. As well as consumer protection regulations unique to the licensed escrow companies.
Below is a side by side comparison of Licensed and Controlled Escrow Companies
|A Certification Program for all escrow officers in the company’s employ, including fingerprinting and background checks by the Department of Justice;||No certification required|
|A requirement that an escrow officer with at least five years’ experience be on-site||No minimums set on years of experience|
|Financial stability requirement, including at a minimum one CPA audit a year; and, frequent surprise examinations conducted by the Department of Business Oversight||No required audits
Not subject to surprise exams
|Prohibiting employment of convicted felons or anyone who has been disbarred from the real estate industry||No employment restrictions|
|Membership with the Escrow Agents’ Fidelity Corporation (EAFC) which provides fidelity coverage for member trust accounts
|Funds do NOT need to be held in a Trust account.
No fidelity coverage.
|Company’s sole business is doing escrow, which requires a higher level of state regulatory requirements and oversight.||Can be owned by a variety of entities, including real estate brokers, mortgage brokers, banks, savings and loans, and title insurance companies.|
Find out more about the ins and outs of escrow go to EscrowHeights.com