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California Escrow Association – 58th Annual Education Conference

The California Escrow Association held their 58th Annual Education Conference this past weekend. I attended this 2 day affair and have a lot of really useful industry information that I took away from the event. As President of New Venture Escrow in San Diego I take extreme pride in the opportunity to see how the settlement industry is evolving (albeit slower than I like). I will attempt to summarize my 48 hours of fun into a tidy 5 minute read for you.

The conference started by jumping right in to the influence of digital signature. The General Council and Senior Product Coordinator for the CA Association of Realtors were the first to address this topic. They made an interesting distinction between electronic signature and digital signature. With a digital signature, a signor acknowledges the said format and agrees to specific terms of use with the signature. With electronic signature, it is much less structured. The specific example they used for electronic signature was when we sign off on charges at the supermarket. The presentation went on about the validity and use of these digital signatures in the Real Estate world. CAR has embraced the digital signature world and it is evident by how many Real Estate agents use this technology in their everyday use. An interesting point was also made that when we as a settlement agent have any concern over the validity of an electronic signature that we should always pick up the phone and call the person who signed. Wait, people still use the phone to communicate? CAR also made us aware that the Residential Purchase Agreement would be revised and a new RPA would be issued in November of 2014.

The next topic involved staying complaint in this digital world. We live in a very litigious industry and in a very litigious state (CA) so this was a logical topic to hit next. The speaker, Steven Garcia, is an attorney who was well versed with our industry and this particular topic. Legislation regarding digital signature has been written and published since 1999. The law includes both state (UETA of 1999) and federal (E-Sign 2000) legislation. The purpose is to ensure equivalency between electronic and paper transactions. Since then, there has not been any case law released. This means that any dispute over digital signature has not gone through to trial where a judge can rule.  Everyone anticipates this will change in the not so distant future but for now, we are left to make “business decisions” when it comes to use of digital signature. A digital signature is binding regardless if the signature has read and understood the document.

One constant challenge we face with use of digital signature is the banks acceptance of this method. The laws and enforceability of digital signature mirror that to a live signature. However, major banks such as Wells Fargo have made the business decision to not accept this form of acknowledgement. I see this changing soon. At New Venture Escrow, we are sending out opening escrow packages, as well as other escrow documents, to can be digitally signed and the response has been well received amongst our clients. To conclude this session they looked even further out into the horizon of our industry and introduced online notaries. This form of verifying signature is done online and legal in Virginia where there is a heavy military presence. It is not legal or acceptable in CA at this time; however the industry is pushing for it. Notaries were quite the hot button at the conference.

I am using my creative license to somewhat jump around on topics. The Department of Business Oversight gave an insightful update on compliance during the conference and notary fees were front and center. The message was clearly to be certain that clients are not being overcharged for notary services. The DBO is looking closely at the invoices of these services to see how many signatures are being notarized, the cost of the service relative to verifying those signatures, and whether or not the client has acknowledged those charges. Kathy Partin was the Department speaker and gave a great 1.5 hour presentation. Interestingly, the Department of Business Oversight is California’s reorganized group that combines the former  Department of Finance and the former Department of Corporations. With this “consolidation,” the state claims that it would be reduce redundancies in oversight however neither department had made any layoffs. Because this change went into effect July 1, the effectiveness is still to be determined. Mrs. Partin made light of the fact that with the consolidation that the new department issued smart phones to the entire staff that had the ability to receive company emails. This should be a great relief to some of us that have had to wait weeks for emailed response. I suppose this is a major step and should be applauded.

Sticking with compliance, the Consumer Financial Protection Bureau (CFPB) is implementing a new disclosure at the end of 2013 that will surely shake things up. The new required disclosure is called a Closing Disclosure and will be required to be signed by the borrower 3 days prior to most all residential transactions. We got a copy of the proposed disclosure at the conference and it left more questions than answers. Fidelity Title Corp presented the most recent draft of the Closing Disclosure and it essentially a mix of the current Good Faith Estimate that lenders create and an Estimated Closing Statement that the settlement agent creates. This left the us with the uncomfortable position of figuring out who would be responsible for completing this form, getting it signed, and complying with this new regulation. Fidelity had reached out to its 5 largest lending clients to get their input and all 5 lenders came back with different strategies on how, who, and when this would be handled. This should make 2014 interesting right? The good news is that the CFPB will release the final rule at the end of 2013 and give a grace period for implementation.

It wasn’t all work at the conference. We had an inspirational speaker during lunch, Citizens Bank hosted a wonderful dinner, and there was a hosted cocktail hour that included Karaoke. Overall I felt that this event was a huge success for me and I got a lot out of it. I will be implementing several key initiatives at New Venture Escrow that surfaced as a direct result of this conference. Next year the event will be in Palm Springs and I am already looking forward to an encore at the Karaoke machine.

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