Field Guide toEscrow Accounts/Earnest Money

Field Guide toEscrow Accounts/Earnest MoneyBy Kerrie Bartlett Walsh, Senior Marketing Specialist



C O N T E N T S
Escrow AccountsEscrow AdministrationEarnest Money DepositsEscrow Fraud and Real EstateCase Summaries - Escrow MishandlingBooks, eBooks & Other Resources


Escrow accounts are funds that a lender collects to pay the monthly mortgage insurance premiums, homeowners insurance policy premiums and yearly property taxes. Earnest money, on the other hand, is a good faith sum of money given to bind a contract, for example an agreement to purchase real property or a commitment fee to assure an advance of funds by a lender. This field guide will provide you with details on escrow accounts (from the basics to escrow administration) and earnest money as well as information on escrow fraud. You'll also uncover a variety of case summaries on escrow mishandling, in addition to the numerous digital resources available from the Library's eBooks collection.
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Escrow AccountsHow the term escrow relates to your real estate transaction, (About.com, 2007).Escrow account - everything you need to know, (Mortgage-x.com, 2007).The new word in home sales - "cancelled" - buyers back out of deals in record numbers, a $30,000 deposit lost, (The Wall Street Journal, Nov. 3, 2006). FAQs about escrow accounts for consumers, (U.S. Department of Housing and Urban Development, June 20, 2005).Do it yourself, (Kiplingers, Mar. 2003). How to keep escrow shocks to a minimum, (Money, June 1998). Escrow AdministrationEscrow and trust record keeping - 10 tips for safer escrow accounts, (REALTOR® Magazine Creating and Monitoring Business Systems Toolkit, 2007). 6 musts for escrow and trust record keeping, (REALTOR® Magazine Creating and Monitoring Business Systems Toolkit, 2007). Post-contract pitfalls, (www.realtor.org, Mar. 24, 2006).

Know Your Client's Rights - Six Must-Know Escrow Facts
Escrow instructions should specify in writing how and under what conditions monies will be disbursed, especially if the transaction doesn't close.Escrow is a fiduciary relationship but is limited to the duties involved in the escrow. The escrow agent is a trustee of both parties and is equally responsible to both parties for the administration of the escrow. If a transaction fails to close as scheduled, monies may continue to be held in escrow provided there is no written demand from one party to cancel the contract. Monies are typically held after the closing date if a date to obtain the loan has passed but the parties still want to proceed with the transaction.If the transaction is cancelled by either party, the agent holding the escrow monies shouldn't disburse any funds until all parties agree in writing how to disburse them.If parties can't agree on how to disburse funds, the escrow agent may file an interpleader, which names all the parties that might have an interest in the monies and asks a court to decide how to disburse the money. Otherwise, an escrow agent may be obligated to keep funds indefinitely.If a transaction is cancelled by the parties, real estate brokers and other third-party vendors may have first claim to escrow funds. That claim would depend on procuring cause.Source: The list issue: legal - 6 must-know escrow facts, (REALTOR® Magazine, March 2005).


Earnest Money DepositsThe earnest money deposit, (RealEstateABC.com, 2007).Earnest money deposits - protect your good faith deposit, (About.com, 2007).Questions and answers on earnest money deposits, (North Carolina Real Estate Commission, 2007).First-house buys can knock you off your foundation, (Washington Business Journal, Apr. 21, 2006).


Escrow Fraud and Real EstateMortgage scams: real estate closing fees kickback scams, (www.fraudguides.com, 2007).Growing ownership makes Hispanics target for predatory lending, (The Business Journal of the Greater Triad Area, Oct. 20, 2006).Title companies investigated, again, (Realty Times, Mar. 1, 2005).Don't be a victim of loan fraud, (U. S. Department of Housing and Urban Development, Aug. 18, 2