2015 VETTING RESPONSE: (Draft 04/22/2015) Copy and Paste to Your Letterhead

2015 VETTING RESPONSE: (Draft 04/22/2015) – Copy and paste to your letterhead

To Whom It May Concern,

______Escrow is in receipt of your communication dated ____ requesting information to approve it as a “vendor” along with your Confidentiality Agreement.

Please be advised that ______Escrow is a California corporation holding a California Department of Business Oversight Escrow (DBO) License to act as an Escrow Agent in the State of California. ______Escrow acts under the California Escrow Law and regulations (Financial Code, Division 6, Sections 1700 to 1703 and California Code of Regulations Title 10 – Chapter 3 – Subchapter 9), as a neutral third party fiduciary to the parties to the escrows that we handle. By law, our obligations to the parties to those escrow transactions are determined by the terms of the mutually agreed upon escrow instructions.

All of our employees, shareholders, officers and directors must register with the DBO and the Escrow Agents Fidelity Corporation (EAFC); be fingerprinted and undergo a thorough State and Federal criminal background check. Only after completion of that process are those individuals permitted to process and handle any escrow transactions.

On December 5, 2012, the Commissioner of the California Department of Corporations (DOC), now the Department of Business Oversight, issued Bulletin #001-12. It states that requiring the further vetting of licensed escrow companies or their employees in California by a fee-based third –party risk management service as a condition of approving them to handle an escrow transaction likely (and in our opinion certainly) violates several provisions of California and Federal law. The Bulletin further admonishes lenders under the DBO jurisdiction not to engage in similar behaviors. As the DBO and EAFC already conduct thorough background investigations of all employees, checking them against multiple databases including the FBI and DOJ, as a condition of employment, ______ESCROW does not participate in any further vetting of its owners, officers or employees.

As a licensed California escrow agent, all transactions and information pertaining to the employees and owners of ______Escrow, and its customers are subject to the strict privacy protections of California law, including the provisions of Article 1, Section 1 of the California Constitution, in addition to Federal Privacy Laws. We are not able to waive those privacy rights merely because we serve mutual consumers, nor are we able to cooperate with invasive third party audits of our files or to enter into confidentiality agreements in conflict with those laws.

California regulatory oversight of licensed escrow businesses is widely recognized as the oldest and most comprehensive in the United States. You can access the DBO’s comprehensive FAQ site here:http://www.dbo.ca.gov/Licensees/Escrow_Law/FAQs.asp for background information to help you understand the stringent regulations that we are governed under.

______Escrow will continue to perform and provide our services with the utmost diligence and care and will comply with your Loan Closing Instructions to the extent that they pertain to the escrow function and as allowed by our limited capacity as an escrow holder.

In the spirit of recognizing the wisdom of any lender collaborating with a third party selected by consumers, to confirm that they are doing so with a legitimate entity, we offer the following information, which will provide you with ample documentation for that purpose. (DO NOT INCLUDE IN YOUR LETTER: NOTE: give no more than necessary – make them work for it, and preferable no more than the following)

1. DBO License #xxx-xxxx 2. EAFC Member Letter 3. Copy of the Business License for ABC Escrow, if applicable.

In addition, we offer the following attachments which will give you a more in depth explanation of what the issues that we have been concerned with together with our submissions and letters to various entities and government agencies: 1. Lender Vetting of Escrow Holders – Statement put forth by the Escrow Institute of California 2. Licensing and Regulatory Stands for Independent Escrow Companies – put forth by the Escrow Institute of California 3. Department of Corporations (now the Dept of Business Oversight) Commissioner’s Bulletin No. 001-12 re: Emergence of Third Party Risk Management Companies 4. CFPB Compliance Bulletin 2015-01 – Treatment of Confidential Supervisory Information 5. Letter to Commissioner Owen of Dept of Business Oversight dated March 6, 2015 with Notes and Analysis 6. Escrow Institute of California letter of February 6, 2015 to Richard Cordray, Director of the Consumer Financial Protection Bureau 7. American Escrow Association letter of Feb. 11, 2015 to Richard Cordray, Director of the Consumer Financial Protection Bureau 8. State of Washington Dept of Financial Institutions letter regarding the vetting practice 9. California Assembly Bill No. 1169 re: Escrow agent rating service 10. California’s Buyer’s Choice Act 11. Escrow Institute of California letter of Sept 25, 2012 to Andrew Liput of Secure Settlements Inc.

Please do not hesitate to contact me if I can be of further assistance.

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