Bulletin: OH2017001

Date:
January 18, 2017
To:
All Ohio Issuing Offices
RE:
UNDERWRITING - Good Funds Legislation effective April 4, 2017

Dear Associates:

On January 4, 2017, Gov. Kasich signed into law Sub. HB 463, which amends Ohio Revised Code Section 1349.21 captioned Disbursing from an Escrow Account and commonly referred to as the Good Funds statute. The Bill will become law on April 4, 2017. As with the original legislation, its goal is to protect against fraud and to preserve the integrity of the consumer’s funds that are held and disbursed in the real estate transaction. This amendment makes significant changes to the current legislation, which has been in effect since 1996. It provides that no escrow or closing agent knowingly shall make, in an escrow transaction, a disbursement from an escrow account on behalf of another person, unless the following conditions are met:

(A) The funds necessary for the disbursement:

(1) Have been transferred electronically to or deposited into the escrow account of the escrow or closing agent and are immediately available for withdrawal and disbursement;

(2) Are in the aggregate amount not exceeding $1,000.00, have been physically received by the agent prior to disbursement and are intended for deposit no later than the next banking day after the date of disbursement; or

(3) Are funds drawn on a special or trust bank account as described in division (A)(26) of section 4735.18 of the Revised Code.

(B) The transfers or deposits described in division (A) of this section consist of any of the following:

(1) Business checks drawn on special or trust bank accounts described in division (A)(26) of section 4735.18 of the Revised Code;

(2) Cash, personal checks, business checks other than those described in division (B)(1) of this section, certified checks, cashier’s checks, official checks, or money orders that are in an aggregate amount not exceeding $1,000.00 and are drawn on an existing account at a federally insured bank, savings and loan association, credit union, or savings bank;

(3) Electronically transferred funds via the automated clearing house system initiated by, or a check issued by, the United States or this state, or by an agency, instrumentality, or political subdivision of the United States or this state; or

(4) Electronically transferred funds via the real-time gross settlement system provided by the Federal Reserve banks.

Note that money orders from a convenience store or similar location are not permitted, even though they are under the $1,000.00 threshold. Funds drawn on a real estate broker’s trust account (as described in ORC 4735.18(A)(26)) may be in the form of a business check.

Agents are cautioned to be mindful of previous bulletins addressing wire and cyber fraud that is prevalent throughout the industry. More wire transactions will present more opportunities for the perpetrators of fraud schemes. Agents should have a secure system in place to guard against such attacks. Phone logs are recommended as a trusted source for contacting customers. Wires should be confirmed verbally with the intended recipient to confirm accuracy of the instructions prior to initiating the transfer. If you are asked to change disbursement instructions mid-transaction, contact the party who made the change request by phone or another previously-established means as provided in the file, NOT from the email in question. Do not rely on letters or voice messages. Be hypervigilant to last-minute changes in funding instructions.

Likewise, agents should advise customers of the potential for fraud and should caution them to follow the aforementioned procedures when sending or receiving wires. Instructions regarding wires should be directly between the agent and the customer, not through third parties such as realtors. 

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
SLS2016005 CLAIMS AVOIDANCE - Email Impersonation Wire Fraud Scheme Targeting Customers; FinCEN Advisory
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None