Ethics Panel Discussion 123
SCENARIO #1: Horned Frog Title Insurance Company It's a hot Friday afternoon in Fort Worth, and Jim Bob (who is a Vice President for Horned Frog Title Insurance Company) has just learned from his auditor that one of their agents, Boomer Sooner Title Agency, has been found to have committed a major defalcation in the millions of dollars range. Jim Bob knows that Boomer Sooner only has two underwriters Horned Frog and Bevo Title Insurance Company down in Austin. And it just so happens that Jim Bob has a tee time tomorrow morning with his good friend Kenny Bob, who is a Vice President for Bevo Title. So to paraphrase Jim Morrison and the Doors Jim Bob's brain begins to 'squirm like a toad'... Should he: 1. Tell Kenny Bob during their golf game tomorrow about Boomer Sooner so Bevo Title can get their own auditors in there to see what their exposure is? 2. Notify TDI? (He recollects Item #22 of the Minimum Escrow Accounting Procedures & Internal Controls) 3. Tell a 3rd party who he knows will likely tell other people over at Bevo Title, and thereby avoid any Privacy Issues for himself? 4. PUNT!!! 124
SCENARIO #2: Oh by the way, I had a commission check bounce at another title company I am a prominent Escrow Officer with a CESA certification, sitting at my son s baseball game when my good friend who is a top Realtor with #1 Realty, says Oh, by the way, did I tell you that my commission check from the close with that other title company bounced when I deposited it? What should I say? If anyone, who should I tell? 1. Do I defend my competition? 2. Recommend that she call the Management of the other title company to advise them of the problem and arrange to pick up a cashier check for her commission? 3. Maybe I offer to call my friend at the other title company and inquire? 4. Should I tell my realtor friend to get an attorney and sue? 125
SCENARIO #3: Kenny Rogers was right: You ve Got to Know When to Hold Em Sassy Sue Realtor has just brought a $500,000.00 cash transaction to Judy Closer. Judy has been working for at least a year to get Sassy s business. The Earnest Money is a $5,000 check. Sassy tells Judy, I am finally able to bring something over to you! The thing is, I need for you to hold the Earnest Money check don t deposit it for at least 10 days. My buyer has to transfer money and it will take at least that long for it to credit to this account. What does Judy Closer do? 126
SCENARIO #4: The Church Lady and the Stamp of Approval Your very good friend, Darling Realtor, who attends church with you, and whose son plays on your son s baseball team has just brought you the document you need to clear title on a large transaction. However, the document is not notarized because when the parties were ready to sign, no notary was available. Your good friend told the parties, no problem, the closer at the title company is a good friend of mine, and she will notarize the document even if it is already signed. What do you do? Is there anything you can do to save your friendship and the business? SCENARIO #5: Guilt Trips She s back that Sassy Sue Realtor. This time her contract is closed, but has not yet funded. She is on her knees begging for her commission check to be cut, even though it will not fund until late tomorrow. Her son who is away at college is about to be expelled for non payment of tuition, her husband does not know she used the tuition money for a new wardrobe. Please just this one time can you make an exception and give her the commission check? She will never ask again, and will bring you all her deals. What do you do? Do you have any options? 127
What does an Escrow Officer do if he/she overhears something that affects the transaction, the loan or title insurance? Think about the following two examples. ETHICAL SCENARIO #6: I ve Got Those Wedding Bell Blues (Apologies to the 5th Dimension) At closing, the seller is signing all documents as a single person. As the last documents are signed, the realtor leans over to the seller and asks: Oh, by the way, how did your wedding go last week? Now what? ETHICAL SCENARIO #7: They must think I'm hearing impaired Near end of closing a purchase with an owner occupied loan, after the borrowers sign the appropriate occupancy or homestead affidavit, the escrow officer overhears the borrower s wife say to her husband: Are we really going to have to move into this house now? Or, possibly: I ve signed this to get the deal done, but there is no way I m going to move into that house! Now what? 128
ETHICAL SCENARIO #8: What do you think (Avoiding litigation heartburn) While reviewing the survey, a couple asks you if it is OK for them to move forward with their plans to build a nice big pool in the middle of the back yard. You notice a utility easement in the area. What can you say? When does your answer become a legal opinion? ETHICAL SCENARIO #9: What s the big deal here? Young couple buying their first house brings earnest money check showing Remitter being one of their parents. Do you notify the Lender/Broker? 129