We’re making our way through September, and Orion’s brokers are as busy as ever helping your clients. We’ve helped many brokers help families finance the purchase of their homes throughout the summer, but interestingly Orion is still seeing a solid purchase business. Typically, every year around this time home purchases decline slightly (it isn’t much fun moving households when school starts back up), but interest rates are steady. On the refinance side of things, many of our broker’s clients are tapping into equity to pay off 30 percent credit card debt, for home improvements, tuition, and so on. And whether your loan is a purchase or a refinance, much of the process is the same, and Orion believes that it is important for your clients to understand the loan process.

Many borrowers ask brokers, “What is escrow and an escrow account?” Escrow isdefined as a third person (or company) with whom a contract is deposited. A neutral party. For a contract to be valid it needs two parties, so part of the contract is that both parties agree who will do the escrow, the holder of their contract. In real estate, escrow is a third party that buyer and seller, or in the case of a refinance the borrower and the lender, use to transact funds from one party to the next.

Escrow is also referred to as the “settlement agent.” Given instructions agreed to by both parties, the escrow holder agrees to accept funds from the buyer, and Orion if necessary, and then after paying costs for other services involved in the transaction, deliver the funds to the seller once all promises are fulfilled in exchange for a grant deed from the seller that is delivered to the buyer.

Escrow is neutral and has no “agency contract” with the buyer or seller, its agency is with the transaction. Brokers know that the escrow company has “no dog in the fight” and it plays a vital role in real estate transactions as large sums of money flow through escrow companies on a daily basis for purchase and refinance transactions.

For this reason, it is important to tell your clients not to send money, or provide personal information, to companies unless they are 100% sure of the company. Hackers and cyber criminals want their money and will attempt to take it by impersonating escrow officers. Your Orion AE or one of our Ops staff will guide you through the process to help ensure your clients’ funds are safe. Please ask us about security measures.

Escrow is not only charged with making sure the initial instructions are followed but also that neither party is able to change the transaction without the consent of the other. At closing, escrow is responsible for disbursing funds to all the parties and services involved in the transaction, refunding overages to buyers or borrowers, pay fees to termite, title, home warranty, lender, and themselves, and transmit the net proceeds to the seller. After the closing escrow provides a very detailed accounting of all funds received and disbursed to all parties.

Here's one thing to tell your client. A good escrow officer and company is like a good refin a soccer match: you don’t really notice them unless they mess up.

‍