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Escrow Committee Meeting Agenda Tuesday May 8, 2018

10:00 a.m. Webinar

Call in number: 1-855-929-3239 Meeting number: 802 546 046 Meeting password: May082018

1. Welcome – Cindy Fazio

2. Approve Meeting Minutes from July 11, 2017, October 12, 2017

3. Licensing Update

4. Examination Update

5. Enforcement Update

6. Old Business

7. New Business - Escrow Committee vacant committee positions

Committee Members Philip Dryden, Chair

Laurie LeMay Susan Berry TBD TBD

Consumer Services Division Representatives: Lucinda Fazio, Chief of Regulatory Affairs Devon Phelps, Financial Legal Examiner Steven Sherman, Enforcement Program Manager Rick St. Onge, Examinations Program Manager Lorenda Lillard, Licensing Program Manager Alan Leingang, Examinations Supervisor Joepaul Wong, Examinations Supervisor Charles Moore, Licensing Management Analyst Dawn Woolery, Licensing Management Analyst Michele Gill, Webinar Facilitator

July 11, 2017 | Draft Escrow Committee Meeting Minutes 1

Escrow Committee Meeting Minutes July 11, 2017

Attendees:

Committee Members Present: Philip Dryden Laurie LeMay Susan Berry

Consumer Services Division Representation: Charlie Clark, Deputy Director

Cindy Fazio, Chief of Regulatory Affairs Rick St. Onge, Examinations Chief

Steven Sherman, Enforcement Chief Alan Leingang, Examinations Supervisor

Devon Phelps, Financial Legal Examiner Dawn Woolery Licensing Supervisor

Michele Gill, Webinar Facilitator

Guests: *Guest list as generated by the webinar program – may not be complete

Lora Lilly BSF Michele McGhuey Tammie Warnke

Shalini Chhabra Kay Oliver Meeting Called to Order at 9:03 a.m.

Welcome Quorum met, approval of minutes for the October 2016, and January and April 2017 meetings. Laurie moved Susan seconded the motion and the minutes were approved unanimously.

Licensing Update Escrow Agent Numbers as of June 30, 2017:

59 Main Offices (58 reported at April 2017 meeting)

10 Branch offices (10 reported at April 2017 meeting)

80 Active Escrow Officers ( 80 reported at April 2017 meeting)

31 Inactive Escrow officers (31 reported at April2017 meeting)

111 Total Escrow Officers (111 reported at April 2017 meeting) We continue to see a decline in Escrow Officers holding at a total of 80. We encourage any qualified staff to take the exam so back-ups are in place.

July 11, 2017 | Draft Escrow Committee Meeting Minutes 2

Examinations Update

1 Exam completed in April

0 Exams completed in May

2 Exams completed in June

Average number of violations per exam: 1

Common Violations

1. Information Security Plan

Two Escrow Agents failed to implement an Information Security Plan (ISP). The Escrow Agent

Registration Act, effective April 30, 2016, requires Escrow Agents implement an ISP.

Enforcement Update From April to June 2017, Enforcement received 8 Escrow complaints, Resolved 5 complaints. Investigations: Investigations – Open (EARA only) 5 Investigations – Open (All Industries) 125. Enforcement Actions—EARA Statement of Charges (Issued in Period) 0 Consent Orders (Issued in period) 6 Criminal Referrals 0 Final Orders (issued in period) 0 Civil Actions: (injunction, enforce subpoena) Temporary Cease and Desist: 1

Old Business. None.

New Business Charlie addressed the advertisement for the two open escrow committee member positions. The advertisement was posted to the DFI website March 20, 2017. We have not received any applications. Charlie is encouraging all who have an interest to submit an application or send it to someone who would be interested in the position. Phil also encouraged callers on the line to apply or forward to someone who would be interested. Cindy Fazio also suggested that the application be listed on Escrow Association of Washington website.

3 exams completed from May through

June 2017.

2

July 11, 2017 | Draft Escrow Committee Meeting Minutes 3

Tammy Warnke spoke on the budget outcomes for Washington State, informing all that the tax revenue package was signed, but it did not include the raising of real estate excise tax rate. The capital budget has not yet been passed. Cindy reminded the group that the test review session was immediately following and that the Committee members would have to log off of this webinar and follow the instructions given to sign in to the Pearson webinar. Meeting Adjourned at 9:25 a.m. You may listen to a recording of the entire meeting at: https://dfi.wa.gov/escrow-agents/committee

October 12, 2017 | Draft Escrow Committee Meeting Minutes 1

Escrow Committee Meeting Minutes October 12, 2017

Attendees: Committee Members Present: Philip Dryden Susan Berry Consumer Services Division Representation: Rick St. Onge, Examinations Chief

Steven Sherman, Enforcement Chief Lorenda Lillard, Licensing Chief

Alan Leingang, Examinations Supervisor Joepaul Wong, Examinations Supervisor Devon Phelps, Financial Legal Examiner Dawn Woolery Licensing Supervisor

Carolyn Sabin, Webinar Facilitator Guests: *Guest list as generated by the webinar program – may not be complete

Lora Lilly Cyril Zoldak Michele McGhuey Tammie Warnke

Natalie Altamirano Meeting Called to Order at 9:05 a.m. Welcome Quorum not met, approval of minutes deferred to next meeting. Licensing Update Escrow Agent Numbers as of September 30, 2017:

• 60 Main Offices (59 reported at July 2017 meeting) • 11 Branch offices (10 reported at July 2017 meeting) • 83 Active Escrow Officers ( 80 reported at July 2017 meeting) • 26 Inactive Escrow officers (31 reported at July 2017 meeting) • 109 Total Escrow Officers (111 reported at July 2017 meeting)

We have seen an increase in Escrow applications with 3 pending and one currently approved.

October 12, 2017 | Draft Escrow Committee Meeting Minutes 2

Examinations Update • 2 Exam completed in July • 0 Exams completed in August • 1 Exams completed in September

Average number of violations per exam: 1

Common Violations

1. Information Security Plan

Two Escrow Agents failed to implement an Information Security Plan (ISP). The Escrow Agent Registration Act, effective April 30, 2016, requires Escrow Agent implement an ISP.

Email phishing attacks have increased and has resulted in wire fraud. To assist licensees in developing their ISP, DFI hosted an Information Security seminar and has an Information Security webpage. Although DFI does not give legal advice and we do not endorse or recommend any person, product, or institution the information may be used as a resource. Escrow Quarterly Report Update The EAQ online filing system went live Q3, 2016. Improvements in administrative and examiner time include decreasing the total processing time of each report by 14.33 hours. The online system also is capable of automatically finding expired licenses. Enforcement Update From July to September 2017, Enforcement received 6 Escrow complaints, Resolved 5 complaints. Investigations: Investigations – Open (EARA only) 4 Investigations – Open (All Industries) 98 Enforcement Actions—EARA Statement of Charges (Issued in Period) 1 Consent Orders (Issued in period) 0 Criminal Referrals 0 Final Orders (issued in period) 0 Civil Actions: (injunction, enforce subpoena) Temporary Cease and Desist: 0

3 exams completed from July through

September 2017.

October 12, 2017 | Draft Escrow Committee Meeting Minutes 3

Old Business Pearson Vue selected questions for review based on past test data. In July and August 2017 representatives from DFI and the Escrow Committee reviewed the questions and provided comments directly to Pearson Vue. The next step includes meetings to review comments as a group and review the test question risk rating. Meeting dates TBD. New Business 2018 Webinar dates will be determined via email. Meeting Adjourned at 9:17 a.m. You may listen to a recording of the entire meeting at: https://dfi.wa.gov/escrow-agents/committee

Escrow Committee Licensing Unit Quarterly Report

May 8, 2018

3/31/18 2/28/18 1/31/18 12/29/17

Main Offices 61 60 59 60

Branch Offices 11 11 11 11

Active EOs 87 87 86 85

Inactive EOs 28 28 29 28

Total EOs 115 115 115 113

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80

100

120

140

160

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Current Escrow Licensee Trends

Main Offices

Branch Offices

Active EOs

Inactive EOs

Total EOs

CS - Examination Unit Report Escrow Program

Escrow Committee Meeting May 8, 2018

Examination Summary

2 Exams completed in January 3 Exams completed in February 3 Exams completed in March

Average number of violations per exam: one

Eight exams completed from January-March 2018

Composite Rating

Number of Exams

Previous Avg. Exam Cost

Current Avg. Exam Cost

Exam Cost Change

1 5 $ 1,534.77 $ 1,547.72 $ 31.99

2 2 $ 1,927.91 $ 1,923.57 ($ 4.34)

3 1 $ 2,634.11 $ 2,542.41 ($ 92.00)

4 0 $ 4,187.50 N/A N/A

5 0 $ 19,343.75 N/A N/A

Common Violations

There were no common violations cited. However, I am starting to see more nonnumeric Closing Disclosure issues.

Escrow Committee Enforcement Unit Quarterly Report January 1, 2018 – March 31, 2018

Complaints EARA Quarter

EARA 2018

All Industries Quarter

Received in period

9

9

331

Closed in period

9

9

276

Open as of 3/31/2018 EARA

9

Other Industries

212

Total Complaints Open

221

Investigations

Investigations – Open (EARA only) 4

Investigations – Open (all industries) 94

Enforcement Actions 1st Quarter

CCSA 0

CLA 14

EARA 0

MBPA 16

UMSA 0

Enforcement Actions – EARA

Statement of Charges (issued in period) 0

Consent Orders (issued in period) 0

Criminal Referrals 0

Final Orders (issued in period) 0

Civil Actions: (injunction, enforce subpoena) 0

Temporary Cease and Desist 0