Breaking News! Fidelity Documented Guide To Steering

“You are expected to steer or refer business only to our own sister companies.”

This statement comes from a colorful PowerPoint presentation that recently surfaced concerning a Fidelity Escrow Technical Memorandum distributed to Fidelity escrow managers.

The Technical Memorandum and PowerPoint require that, when a Fidelity customer or client asks for a referral, Fidelity Escrow agents are to steer business only to Fidelity sister companies. The power point further states that this practice is to “…keep as much of the available revenue from the real estate transaction within the Company…

Isn’t escrow supposed to be neutral in the transaction? Is it neutral for an escrow officer to steer referrals to affiliated companies so that escrow’s parent company can “keep as much of the available revenue” as possible?

How does this practice affect you? Has an escrow officer steered a referral in one of your transactions? Was one of the service providers selected by your client changed without your knowledge and contrary to the RPA or escrow instructions?

Do not simply standby! You may have violated your fiduciary duty to your client by allowing the transaction to go forward!

Without your comments, these practices will keep tarnishing the name of the good real estate professionals throughout the industry.

  • spaul123@gmail.com

    Why people use a title company for escrow services is beyond me…

    • bobgoldpr

       

      It seems that Title
      company owned/controlled escrows are predominant in certain parts of the State
      of California. It may be hard to find independent escrow companies to give the
      business to in those areas. 

    • Cmunder

      Some people prefer to use an escrow department within a title company for numerous reasons, one of which may be that a title company may be more financially solvent than a small, independent escrow company.

      • AJ

        There are many independent escrow companies that provide customer service that is outstanding.  The reason many people use the same company for title and escrow is fee related. They lead you to believe that you save a bundle when you use both of them and that the title rep or title officer is able to better work with your client and you (as an agent) if title issues pop up. As a former title rep and current real estate broker, I can tell you that its not true.  Your duty is to your client and their best interest, not to  escrow or title 

    • RE_Insider

      It seems that Title
      company owned/controlled escrows are predominant in certain parts of the State
      of California. It may be hard to find independent escrow companies to give the
      business to in those areas. 
       

  • Whistleblower

    How they get away with this under RESPA has always baffled me. It should be prohibited and all of these companies required to divest their interests in each other. The only reason why you should refer someome to a closing service is because of the qulaity of their service, not for the financial gain of your broker.

    • RE_Insider

       Good comment but in addition to RESPA, escrows
      are regulated in each State independently from RESPA. When escrow is
      owned/controlled by a title company I believe that the Insurance Commissioner
      office is the regulator. I do not believe that under current law escrow
      officers are allowed to make any type of referrals. I am going to find out and
      get back.

    • RE_Insider

      Good comment but in addition to RESPA, escrows
      are regulated in each State independently from RESPA. When escrow is
      owned/controlled by a title company I believe that the Insurance Commissioner
      office is the regulator. I do not believe that under current law escrow
      officers are allowed to make any type of referrals. I am going to find out and
      get back. 

  • Michael B

    Personally I always refer at least 3 companies or if the client has a company in mind to go with that company.  i don’t want to be attached if something goes sideways.

  • Markecestaric

    Looks like they are taking their lead from the Obama administration.  

    • DL

      Acctually, That we the Bush Admin, Bill Foley is all about outsourcing and Huge Republican Donor!

  • Karen

    As an escrow officer for 33 years, and a former Fidelity employee, I am appaled.  When I was employed there in the 90’s, I always told escrow officers, and was company policy, that we COULD NOT just recommend 1 company, if clients wanted a referral.  We gave them the names of 3 companies, for termite lets say, and they had to choose.  Where is their neutrality???  Fidelity is taking over the title industry, and may of the ancillary services.  What has happened to our business?  Very sad to me!

  • Doc Livingston

    It would seem to me, that will all of the problems that we have had to face, Escrow Companies should be setting a higher standard!!!

  • Mike

    My experience with Fidelity Title and their escrow in particular has been of the worst. In trying to help a client unravel a huge error made by both divisions, I observed only incompetence, ineptitude, stonewalling, lack of cooperation, and finger pointing. Memos such as referenced in the article help explain why. Inbreeding eventually causes a collapse of the gene pool. Even before I read this posting I stayed away from them any time it was possible.

  • Dfs

    show some screen caps of the actual PowerPoint presentation.

  • Anonymous

    I had this every thing happen with another escrow company, Old Republic.  I had ordered a home warranty through another company but the escrow officer didn’t use that one and ordered it through their own company, one I’ve never used, and am not fond of.  I was rather incensed to say the least.

    • GwenGallagher

      I don’t believe any steering occurs in the Old Republic family of companies.  The entire organization has a foundation of integrity and takes seriously their fiduciary responsibility . In addition, Old Republic Home Protection takes pride in serving our customers in excellence.  If you’re not fond of us, I’d be sincerely interested in understanding what has created that perception. Please feel free to contact me directly. I look forward to hearing from you!

  • Nojids

    Silly!!!!  Very Silly!!!!!

  • Sandi

    I agree – it should be based on service not for the finanacial gain of lining their pockets. If the service is that good, you wouldn’t need to “steer” anyone, it would come automatically.

  • This type of steering memo does not surprise me. After 18 years in the business, I have my trusted service providers so I would not need their referral.  It has not affected me because I always check the escrow documents for correctness before the client gets them.  http://SanDiegoHomes4u.com

  • RE_Insider

     My understanding is that they are held to a higher
    standard. I believe that there is strict guidelines for escrow and their
    personnel to follow. I will find out exactly how it reads but I believe that is
    unlawful to steer, make referrals and fill up blanks with their own choices
    between other specific guidelines.

  • RE_Insider

     The selection of escrow is very important. I believe
    that home buyers and sellers most of the time rely on real estate agents for
    referrals for their escrow selection. Some referrals can create headaches with
    your clients.

  • RE_Insider

     Yes

  • RE_Insider

     Thank you for sharing. You might want to consult with
    your attorney. I believe that when escrow officers “steer” to their
    choice, they are bringing liability to all in the transaction, but that is only
    my guess. Again, I suggest to check with your attorney.

  • GHB

    Leave my most favorite title company alone! Don’t u have
    anything better to do? Come to our office and help clean up n vacuum. Thank
    you!
     

    • RE_Insider

       

      Thank you but I will stay with Journalism. Is
      not what we do but what they do that brings them up on the news. 

  • RE_Insider

    Good job, I believe that what you are saying
    “checking the escrow documents” is also securing that the escrow
    officer has not “steer” to his or her choices but follow the escrow
    instructions, right? 

  • RE_Insider

    Yes,
    silly? I do not know, but in my mind frightening!  Home many in not all of
    us rely in the impartiality of the escrow officer? 
     

  • RE_Insider

    Sad for you and I see it as sad for America. Who can we
    trust? 

  • RE_Insider

    If you are an escrow officer, are you allowed to refer
    business to one or three or … I do not know! I heard somewhere that escrow
    agents are forbidden by law from making referrals; I will search for an answer. In the other hand, if you
    are a real estate agent are you safer by referring 3 companies? I believe that
    is a debatable subject. Instead of taking liability for the one you referred,
    now  you are taking liability for the three? Your client may be going with
    the cheaper one since he/she could assumed that you have recommended them
    because you have researched carefully each one of their licenses, insurances,
    performances, financial standing etc. Unfortunately the latest could come in
    court when they are suing you for negligent referral… Do not take me seriously,
    please consult with an attorney. 

  • RE_Insider

    I do not know if I can agree with that. It sounds
    right but I assume that not all title companies are financially sound or in
    more financial solvent condition than any independent escrow company. If my
    memory does not fault me isn’t it true that LandAmerica title was one of he
    largest title companies and close door for financial reasons? Please help me
    here with my memory…

  • RE_Insider

     

    Your
    comment is very interesting “good service = you do not need to
    steer…” did I get it right?  

  • Zachb

     Chicago Title, Lawyers Title and Fidelity are all owned by the same company. What do you expect when they are all owned by the same parent company. Steering is a natural evaluation when big companies become involved in any industry. The Title and Escrow companies should be independent entities not owned by huge conglomerates nor connected.  

  • Matthew

    providing business to a sister company does not impair either. parties rights. If the escrow officer is biased then their is a concern, but the company on its own is not the issue and there are good and bad eggs everywhere.

  • Anonymous

    I can’t believe Fidelity would have the nerve to put such a bold statement into any materials that would be distributed… Especially with RESPA and HUD and other watchdog agencies constantly patrolling

  • RE_Insider

    Your duty is to your client
    and their best interest, not to  escrow or title; you said it! Thank you.

  • RE_Insider

    Owned by independents or big title companies should not make a
    difference: “Escrow
    companies should be trusted, impartial, without steering and following
    the direction given to them by buyers and sellers ONLY”.

  • RE_Insider

     There are good and bad
    eggs everywhere and you pray that in your next escrow you end up sunny
    side up and not scrambled … some humor does not hurt anyone.

  • RE_Insider

     Good attitude, and we encourage
    anyone with a concern to contact you. Thank you.