Has Your Escrow Company’s Bank Been Hacked?

By
Real Estate Agent with Solutions Real Estate CA DRE #01490977

Has Your Escrow Company’s Bank Been Hacked?

 

I heard a pretty scary story today at a meeting of the Southern California Chapter of Certified Residential Specialists (CRS) in Ontario.

 

3 stories, actually.

 

Where did all the money go??!!Seems the bank for the escrow company holding funds for several transactions (buyer’s deposits, seller’s funds) totaling many thousands of dollars was hacked and the funds were stolen.

 

Not a pretty picture for the sellers and the buyers.

 

While with all the hacking we hear about these days, this might not come as a big surprise, but I had not heard of this happening in our business. Consider not just personal information that disappears, but now tens of thousands of dollars (some on a $1.8 M deal) were gone.

 

The DOC and other firms, as well as police, were involved, and my understanding is SOME of the funds were recovered but not all. I’m not an attorney and don’t pretend to be, but one has to be concerned about the legal issues, in addition to the loss of substantial funds and the impact on the transaction

 

This raises some interesting questions:

 

Is the escrow company you are working with, no matter which side you are on, a reputable one?

 

Do they have some sort of cyber and data insurance protection in case this happens?

 

Perhaps something to inquire about before making an offer to find out who the escrow company is.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Best Practices
Groups:
Certified Residential Specialists
CALIFORNIA REAL ESTATE
SAN DIEGO Real Estate Agents & Loan Officers
San Diego Realtors®
Tags:
escrow
agents
ar
cyberhacking

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Ambassador
2,742,738
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Most brokers in MD and VA have their own Trust account for escrow deposits.  My account is insured for up to $200,000, FDIC of course. 

I did receive a $500,000 EM once that I had the buyer deposit with the title company. 

One one cash sale, the buyer deposited the entire purchase price.  I made $10,000 EM in my EM account and opened another trust account for the rest so it wouldn't be part of the EM.

Life get complicated with buyers start coming in with cash and high EM.

 

Mar 22, 2013 09:28 AM #1
Ambassador
4,043,515
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Lenn

True for many brokers here. But once we are into the process normally the EMDs are deposited with the escrow company, and some brokers make the choice to NOT handle buyers funds at all and they are provided to escrow within 3 days of offer acceptance.

Jeff

Mar 22, 2013 09:42 AM #2
Rainmaker
1,799,115
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Jeff, this is more than disturbing...here the monies stay in the Broker's account and then transfer at closing to the title attorney's account...since all broker's do online banking it is possible i am sure for a smart hacker to do this...give us a follow up too please.

Mar 22, 2013 11:55 AM #3
Rainmaker
2,573,724
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

It is certainly a more complicated world than a few decades ago.  Money today is often no more than a few computer key punches onto a screen.  The scenario you illustrate in this blog gives us a lot to consider and be concerned about!

Mar 22, 2013 12:29 PM #4
Ambassador
1,229,806
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County
Do you think that this is more common with DOC escrow or with title? Certainly, the title escrows have much larger insurance policies.
Mar 22, 2013 12:57 PM #5
Rainmaker
375,566
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Jeff, Well that's a mess.  I'd be interested in knowing what escrow company that is.  In No CA the escrow and Title is handled by the same company, but I understand So CA is different.  

Mar 22, 2013 01:49 PM #6
Rainmaker
1,083,977
Gary Frimann, CRS, GRI
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker
Hi Jeff, as mentioned by Lloyd above, we use the escrow dept. of the title company in N. California. What a nightmare though. I wonder if they even offer trust fund insurance for that...
Mar 22, 2013 02:18 PM #7
Rainmaker
1,238,746
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

A local C21 office with a property management dept had $65,000 taken from their escrow account and their bank ALLOWED it because they had ACH instructions for transfers between their escrow and operating accounts AND the bank did not advise the broker that their online banking parameters had been changed...funds when to the Bank of China

Mar 22, 2013 07:56 PM #8
Rainmaker
2,808,428
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Jeff, The first thing that came to my mind was “insurance.” Not all title and escrow companies are reputable. I know of a few that were taken down – thank goodness. I think most of us presume the money is safe, people are professional, and the company is reputable.

Mar 23, 2013 12:20 AM #9
Ambassador
4,043,515
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Ginny - it was the same in Massachusetts. It's quite different here. I'm going to see what else I can learn.

Myrl - and I did a quick search and foudn that this sort of thing is not all the uncommon. Scary

Melissa - don't know but a good question. I will ask my escrow friend who shared these stories

Lloyd - well it varies here. Sometimes it's the same (I use Fidelity title and ecrow when on listing side) but other times they are different companies.

Jeff

 

Mar 23, 2013 02:01 AM #10
Rainmaker
161,583
Wika Hutchinson
Eugene, OR
Broker, CRIS, SFR, CDPE
It's scary to think that some can steal our money and personal information while we're sleeping, and we didn't even know until it was too late.
Mar 23, 2013 04:15 AM #11
Ambassador
3,680,784
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Jeff,  this is scary stuff!  So who's liable if the funds aren't covered?  It should be the bank.

Mar 24, 2013 10:10 AM #12
Ambassador
1,241,398
Kristin Hamilton CA Realtor
Sun Lakes Realty - Banning, CA
(909) 557-6966- Specialize 55+ Communties Banning

Hi Jeff,

Oh my gosh, that is so scary and hopefully they are insured or the properties won't close. I am so surprised someone at the other end didn't check as they didn't just invent the wheel. A change of wiring instructions should have triggered an alert ............and a phone call.

Mar 24, 2013 03:34 PM #13
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Ambassador
4,043,515

Jeff Dowler, CRS

The Southern California Relocation Dude
What's my Carlsbad CA Area Home Worth??
*
*
*
*
Spam prevention

Additional Information