In this episode we welcome one of our most knowledgeable and well-respected local title attorneys, Niki Beeson. Niki is part owner of Commerce Title & Abstract Company and has been closing real estate transactions there for over 20 years. In this discussion Niki breaks down for us some of the common challenges associated with closings and how they can be navigated. We get the 411 on title insurance including what it is and how it came to be. We also learned the different levels of title insurance coverage and what they do. Niki gives us tips on facilitating a smoother closing as an agent and talks about the emotional nature of some closings. Most importantly we get VITAL information on the biggest problem facing real estate closings, wire fraud. Niki had our jaws on the floor with the stats on wire fraud and how these criminals are perpetrating wire fraud now. You can’t afford to miss this episode. You may just save your client from losing their life savings!
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03:02 Symbiotic relationship
04:02 Common title challenges
11:23 Judgements to distinguish
22:16 Defect title ins might cover
26:31 Types of property prone to issues
30:36 How does title insurance cover this?
33:06 Wire Fraud
41:19 Encrypted Email?
44:11 How can we avoid wire fraud
49:33 More Complex scams
54:45 Remote closings
57:22 Navigating difficult closings
01:01:01 Close in the same room?
The following is a rough transcript provided by Otter.ai.
but a lot of people think six inches. Right? Right. I always say in my emails have a great day. Yeah. Right. I
would never do that.
And then someone will call and say you never responded to my email.
Your attachment looks sketchy. I did not open it. You are so smart. You do not need to be doing this. There is a better way and he hung up. Hi, y’all. Welcome to hustle humbly. It’s Alyssa and Katie. And we are two top producing realtors in the Baton Rouge market.
We work for two different companies where we should be competitors. But we have chosen community over competition.
The goal of our podcasts is to encourage you to find your own way in business to stop comparing yourself and start embracing your strengths. Hi, Alyssa. Hey, Katie.
It’s episode 190. Wow. Today we have someone in our little fancy studio. This is Nikki Besian. And Nikki, will you tell us who you are and what you do?
Yes, I would love to first thank you so much for having me today. It is a pleasure and an honor to be invited here. My name is Nikki Besian. I am a closing and title attorney with commerce title and abstract company. I have been there for over 21 years. And this is what I do exclusively and what I have done exclusively for the last 21 years.
Wow, I didn’t realize it. Was that a long time?
Yes. I know, a lifetime
has been open for 40. Is that right? It is our 40th
anniversary year this year. That’s right, in October. So we’re super excited to have lasted this long, especially in some bad markets recently, and
you’re the most consistent title office, I think in our market, like when I started 17 years ago, you were there. And you’re I mean, like, I think that it’s just like a staple. If someone is looking for Title work, they’re like, Oh, you must go to commerce. Right?
Thank you agree with that says huge compliment. Very much appreciate me I
wouldn’t. That’s my like, we are very careful about having local vendors on the show. Because we don’t want to hurt anyone’s feelings or anyone to feel left out. But the truth of the matter is, if I need help, I’m going to contact you. So if I’m going to get to choose where I’m closing, it’s going to be your office, and I’m okay with saying that because I know that you’re so consistent and good at what you do.
I appreciate that. But I do have to say there are some good title companies in this town with some nice people,
many of them, but if I’m choosing, you know, and I we’ve told our listeners before, it’s important to have a relationship with your title attorney so that when you have these little quick questions that you need to have answers, there’s someone there that is willing to support you because you have kind of a symbiotic relationship. Right? Yeah, yeah. Okay. Do you want to dig in? Tell us tell us your feelings.
So when I started in real estate, Nikki was one of the first ones that reached out to me, her office is next to my office. And so a lot geography work, did geography work, which is nice and helpful, of course. And I just felt like I was quickly understanding the importance of having a reputable title company with title, there’s not a problem until there’s a problem, right? That is very true. And it wasn’t until you start encountering situations where you realize the importance of a title company, and what they can do and what they’re willing to do. And, and we will get into this, I’ve definitely had situations that have been saved. And so it, it made me realize that, you know, they’re not all created equal. And also the relationship is very important. Yeah. So
yep. Okay, well, let’s just dive right in. Nikki, what are some of the most common title challenges in order to get to closing and I want to preface this by saying, obviously, we’re in Louisiana, you work within the bounds of Louisiana law. It’s different everywhere, I would assume. But I would think some of these challenges kind of come up over and over again.
That’s correct. And every year with the exception of the COVID years, for the last 10 years or so, I’ve attended the American Land Title Association Conference, which has title companies and title attorneys from all over the US attending. And my, what you just said has been confirmed. Everyone in the country has the same problem. Yeah. And the biggest challenge or obstacle that we face is probably the same one that you face. It’s the people, the people and the people. It’s, you know, the emotions that come with it. It’s that they’re busy. It’s gathering information and then either not having it handy or it’s packed or they’re trying to get utilities set up and kids registered in a new school and think that this is this is not the fun part of it. The fun part of it is finding the house and moving in right away. So you know, you don’t want to really be bothered with the information gathering. And then also in this day and age people are, you know, a little bit leery about giving you that private data that we have to have. Yeah. So that’s a challenge to the next challenge with the People’s the scheduling. I mean, you know, to get that many people in Louisiana in the same room, yes, we what we call we wit fun. So we fund on the day that everyone signs and closes, everyone appears at the same time and in the same place, which is not the case in all states. And so getting everyone there at the same time in this day, and age is often a challenge. It takes us a minimum of six phone calls to get a closing scheduled, sometimes twice that. So you know, it’s hard to get that scheduled and beyond the people, the payoffs and HOA information. Those are the biggest challenges, getting people to cooperate payoffs and HOA information,
right? Oh God.
So if a if a subdivision has an HOA now, you know, there’s some that are voluntary and some that are required, you can see that on your end if there is a HOA associated with this address.
So what I can see is that there are restrictions recorded in the conveyance records indicating that a homeowner’s association was created. And for your older subdivisions, you’re going to find a lot of times that they were voluntary, or that there never was an HOA right? That doesn’t mean when can’t be created later. But it’s hard because you have to have 100% of the residents if you don’t do it prior to the development. Wow. So I can tell that there is an HOA I can tell that there are restrictions. However, I do not know how much the dues are. They may set them initially when they create the restrictions. But then over time, yes, the board of directors and the membership can vote to increase or decrease those dues over time. So that is something that is not publicly available. That is something we have to get from the HOA representative. And there is no public database for the HOAs.
What happens if the HOA never responds to you? Well, that has
happened. What do you do? That has happened. And in that case, what we do is we have to take the word of the seller and we have to put the buyer on notice that we were not able to do this. Usually we will enlist the sellers help and say Mr. Seller, we’re going to need you to get something like
go knock on suicide or who runs the HOA.
The biggest problem is when it’s managed by someone the members and not managed by a company then they do they just let it go sometimes sometimes they do. Yeah,
yeah. Okay. That’s terrible.
Very interesting. Right.
So it’s yeah, it’s a wing and a prayer with HOA it really is. You know, so that’s why we have that seller affidavit. I don’t know if y’all have ever noticed that where the seller swears that he doesn’t have anything that to do with knowing right. So that in the event that something happens later on. Okay, well, let’s
take it there. If he had something due and owing that was far enough, I guess back where they had actually filed a lien, you can see that,
yes, if a lien were recorded, I could see that. But we are also obligated to collect any past due DMS or fees, as long as we know what they are and the HOA advisors, advisors what they are.
I mean, have you ever collected the money for a lien and not been able to find who to give it to?
No, because we would need to know the amount of the lien and generally point where they follow lien. Most of the time they have an attorney who assists Okay, got it? Yes.
Interesting. It is. I mean, it’s a lot of information to collect from your buyers and sellers. And they are sometimes reluctant. I’ve had a seller call me very angry because the title attorney or title office reached out and said, I need your social security number. And they were like, Why are these people who we don’t know calling us and asking us this question. And then I had to add it to the email template. The title office is going to reach out to you they need your personal information, including your social security number, like it’s almost like you have to give people fair warning. But from your end, you’re just doing your job and they’re like No.
And on that note a few a lot of episodes ago, we’ll have to look it up. We did an episode on how to be a good Co Op Ah Oh, yes. How to be the agent that people want to work with. And we reached out you were one of the people we reached out to we reached out to other agents title lender to say what can we do to make your job easier, that would be a really good episode for our listeners to go back and listen to. And I think we even have that template of what the title company said because it’s really up to us as the agents to do our due diligence to be able to give you the complete information. Yeah, so I like to copy my clients on the email to commerce and make that introduction, right? Let them know what will be asked of them, let them know that we need HOA information. So anything we can do to make your job easier also,
warning them about the call or the email for that personal information is huge, because then they know to expect it. And even sometimes, then they’ll say, I’d rather call you back with it, or I’d rather give it to you at closing. And for some things that’s, you know, they can always call back if they want to Google our phone number and make sure they’re talking to the right person. There are safeguards they can take if you’re uncomfortable, make
it more safe, right. Okay, but can you wait until closing to give your social security
number? It depends. So if I have to distinguish judgments, and I need that information, the know I needed in it, because but you can run the judgments off of just a name. Yes. Okay. If there are no judgments to distinguish, then I really can’t wait till closing to get their socials.
Okay, tell our friends what judgments to distinguish means.
So let’s just say that your sellers name is John Smith. Okay. John Smith is a very common name. And so what’s going to happen is when my title work is run on, I have a whole page of judgments and liens against John Smith, Johnny Smith, and any variation you can possibly think of Johnny but the Why Johnny with an IE. And so then I’m going to have to go through every one of these and figure out is this John Smith, the same person as John Smith, who owns this house and is selling it right. And if it’s not, then I can disregard it. As long as there is some data on which I can, you know, validly disregard it, if it is the same person, then I have to move forward with curative work to get this judgment paid off and canceled. So common names are really problematic. But if you have an unusual name, that’s super easy. So I can probably wait to get a social security number to closing in that instance, but not for John Smith.
Okay, that makes sense. You’re running basically a title search on the house, and both the buyer and the seller,
I’m shutting the seller in Louisiana, our clerk of court indices are indexed by Vin door and vin de so that means by the seller and by the buyer, there is no index based on the property. Okay, so in some states, there is here There isn’t. So I’m always running only John Smith. And I might find 20, John Smith’s that owned 20 different properties. And so I have to verify that the one who’s selling this property is the right one, but we only index by vendor and vindi. It’s interesting.
So just to kind of go back to the basics for a second when you get a new file, and let’s pretend it’s a nice clean, easy one. There are no judgments or liens. What are the steps that y’all take to get to the closing table once you receive a purchase agreement.
So once we receive a purchase agreement, the first the information gathering begins. And so an escrow assistant will call both the buyer and the seller and they’ll ask for social security number, marital status, which is something we need in Louisiana that not everyone needs to have because we’re community property state, they may ask for a loan payoff information. Anything that it’s we’re going to need in order to get this to closing to to prepare our active sale and to distinguish any judgments. Simultaneously, the abstract is being ordered, once the abstract is prepared by the abstract or which is just a list of all documents found in the conveyance records and the mortgage records relating to the buyer and the seller. And this particular piece of property that is compiled and that is sent to the title examiner, which in Louisiana is an attorney, we examine that title, and then we decide what if anything needs to be done in order to cure it and make it valid for resale. From that point, a title commitment is issued, telling the lender what we have to do to make the title good. And then we prepare the sale documents. And then the lender sends us their documents, we get all of those prepared and compiled and that’s when we sit down and actually close.
Okay. And in one of my situations that I had, where I realized how important the title company is, and this is where I learned a lot about title insurance. I had a listing that was under contract, it was a good friend of mines house, and we had a buyer and everything was going good and then the title company that the buyer had chosen notified me that they found a defect in title from three owners prior where one air three owners ago never signed. So technically this person out there had a small interest and every time it closed since then nobody ever caught it. It just made it through. And then this title company found it and flagged it. Apparently when my friend bought her house She did not have title insurance. And when I asked her about it, she was like, I don’t even know what that is. So I guess at some point, it was waived without her understanding when she bought, you know, I know you see it at the closing table all the time, people say, Do I really need this title insurance? Why is it on here? It costs money. And you know, it’s you don’t need it until you need it. And then you really need it. Well, this title company would not close it. And so I called you and you ran it through your underwriting system, and you had a title insurance company, that would do it. And that was really eye opening to me, because I never understood that it was different and that different title companies work with different title insurance companies, is that correct?
That’s right. It’s not it’s not a simple answer to this question. Okay.
It was a complicated answer. Yeah.
In Louisiana, our mandated contract provides that the seller give merchantable title to the buyer. And merchantable title means that that title is clean and free of any defects and not suggestive of any litigation. Okay. And so if there is a legal problem, we all know, there’s a legal problem, and it’s not merchantable. And, in some instances, legal problems resolve themselves with time, and in some instances, they don’t. But with title insurance does is it allows you in certain instances to issue insurable title, as opposed to merchantable title, which means that title has some defect that may or may not resolve itself in time. But the title insurer feels like the risk is so low, or the amount of the risk is so low, that they are willing to insure that title despite that, it’s not in spite of the fact that it’s not merchantable. Okay. So in that instance, we have to get approval from the title insurance underwriter to do so they will apply whatever their standards are. And title insurance companies are like other people, some of them are more conservative than others, some are more comfortable with certain risks than others. And so they will decide whether that risk is something that they are willing to insure. So in that case, what will normally happen is we’ll reach out to the buyer and say, Mr. Buyer, we cannot provide you with merchantable title in this situation, at this time. And so your option is to either not proceed with this closing, or to proceed with insurable title. And, you know, here are the potential risks and consequences of doing that. And are you comfortable? And in my experience, I’ve only had one time where someone has said, I’m not comfortable right now. Right. So most of the time, they are comfortable with insured title. So in that instance, that’s what happened is that the issue was so far back, and the with some evidence of record, it just wasn’t really exactly right. And let me mention that there are some gray areas, too. So it’s not necessarily black and white every single time. And then that’s when you ought to go with insurance title if you either cannot fix it, or it’s a gray area that one person is comfortable with. And another is not
we have to back up now. Can you give me the basic definition of what title insurance is? And what it does? Because I know a lot of times, at closing, the buyer will look over to their agent and say, Well, what is this? And sometimes the title, you know, Representative steps in and explain sometimes we’re not even in the room? Like, can you just give us the explanation of what title insurance is and
say, What do we say?
May I start with a historical explanation? Because I think it’s very important. So, you know, in the old days, when you didn’t have multinational banks, when you went to your local credit union, and you got a mortgage, your local savings and loan, that savings and land did business with an attorney or a title company that they felt comfortable with their work product, they felt comfortable with their competence. And so the attorney would just give a title opinion say yes, it’s good. Go ahead and issue your mortgage. Let’s close. Well, when the SNL is all crashed, okay? And you started having lenders, multinational lenders from all over the world, Chase Bank does not know who Nikki Besian is, right? They are not familiar with my work practices or my work standards. And there’s no like ratings for us or anything for them to be able to tell whether or not I do good work, and I’m competent. Okay. So that’s when title insurance really was created and started to take some prominence because you had a big company with money behind it to pay for any losses that Chase or Wells Fargo might incur as a result of them using a title to attorney or title company that made a mistake or didn’t exactly have the competence or the skill to do the work properly. Okay. So title insurance basically is there to protect parties, whether that be the lender or the owner, from any defects that may exist in the title to that property losses sustained as a result of defects in the title to that property. And, you know, mostly what it does, in my opinion, is it does cover those losses, and it’s there to cover those losses. But what it does behind the scenes that most people never realize, because we don’t call people to tell them is that it keeps property in the chain of commerce without stopping to fix a problem most of the time. So the most common issue we have is we might have a mortgage that’s 26 years old. And so in Louisiana, a 30 year mortgage would prescribe meaning it has no more legal effect in 36 years, but we’re only at 26. Okay, and maybe the property has been sold two or three times since and this mortgage has never been canceled. The mortgage company doesn’t exist at the title company who would have paid it off doesn’t exist. So what are you going to do? I mean, this, this is going to take months or years to fix with litigation. So the title insurance company will come in and say, Okay, well, it has been 26 years this property was sold 10 years ago, we’ve got 16 years where no foreclosure was filed, no one has complained about a balance due and owing, we’ve only got a few more years, while it has legal effect, we are comfortable insuring this risk, yes, go ahead, close it keep this property in commerce. And then 10 years later, the problem just resolves itself and goes away. So it keeps property in commerce with especially when with these things that are time sensitive, where the problem is going to resolve itself at some time, it just helps you move on quicker without the cost of litigation is what it does on a daily basis. But we’ve also had issues with claims where it’s come in to, you know, deal with the loss. Okay,
so tell us some of the things, what are some of the defects that title insurance is covering, like, give us some exact real life examples.
Okay. So I had one, maybe about two years ago that we closed probably about 12 years ago. And this particular buyer was an investor who bought properties on a very regular basis. And he had this property he bought where the tenants noted, called him and said, We have received notice from someone saying that we’re not to direct our rent to you anymore, that you are not the rightful owner of the property that they are. And so I said, Well, you know, let me just run the title back and see if I can find what they’re talking about. And I ran it back. And there was nothing weird or unusual, everything seemed aboveboard. So I called him back and said, I’m going to need them to send me that letter, I need to find out what the basis for this claim is, maybe it’s total fraud, and then I need to know. And so when he sent me the letter, the people who claimed ownership claimed that their mother couldn’t possibly have sold this property, because she was already deceased at the time that the documents were signed. So there was a forgery in the chain of title. There really was, and there really was, there really was a forgery in the chain of title. And so you know, and for something like that to happen, it’s a little bit unusual here, because of our notary system and our witness requirements and stuff like that, you have to have a lot of people colluding, but in other states, that is not the case. There are less formal requirements. So it’s a little bit unusual for us to see a total forgery because you have to have a node or you’re someone posing as a notary, the seller, and then witnesses all colluding in this fraud. And that’s what happened there.
So did you figure out who was the one that actually fraudulently signed people trying
to collect the rent now, so
Well, the people trying to collect the rent now claimed that they still owned it at their money? So what we did was I assisted this seller with making a title insurance claim, and then they investigate to figure out what happened. And if it was really a forgery, which it was, and in that instance, they bought the house back from him.
The title insurance, yes.
Yes. How do they figure out what value to pay him?
Said the way title insurance works is there’s a couple of different policies. There’s the regular policy, which we had commerce titled Do not sell and most of the title companies in Baton Rouge do not sell most everyone sells the advanced policy. There’s only one company I know of that does not sell the advanced policy, if you ask them, I’m sure they will. But that’s a good thing to ask. With the advance policy, your coverage is for the amount of the sale and then it will graduate up to 50% of the purchase price paid. So if he paid $20,000 for this property, well, he could get a maximum of 30 Okay, but only the advanced policy does that the regular policy you are limited to the amount of the purchase price at the time of the purchase.
So like if you’ve gotten equity, you’re you wouldn’t get any of that back. Right.
And so another thing I like to tell people about title insurance because inevitably, a sophisticated party will say well, you have, you know insurance. And of course, I do have no insurance. But a fraud in a forgery in the chain of title is not an error or an omission, because I could not have known that. So a lot of the claims that you see are not errors and omissions because they’re not negligence, they’re not something that you would have known. Also in Louisiana, we have a three year statute of limitations, a parental statute for attorneys. So most people don’t find a problem until they go to sell or refinance. So if they buy the house, and they don’t do anything for seven years, well, even if it’s negligence on the part of the attorney, that claim is going to have expired. So that’s the benefit of the title insurance is that you have also what if that title attorney doesn’t have any money to pay you? What if they don’t have, you know, coverage? What if it’s not enough? You know, so that’s what the title insurance is there for us to cover things that wouldn’t be covered, the coverage has expired, there’s not enough coverage. There’s a lot of different reasons to buy it.
So one of the questions I was going to ask, but now I’m thinking it may not what I was thinking wasn’t correct was, are there certain types of property that are more prone to have issues, such as properties and older parts of town, but then it sounds like it’s not really the property, as much as it is just it’s history of owners. That’s where the messiness can occur.
It’s both, okay, it’s both you, you arrive with your first thought, there are properties that are more prone to issues. One is foreclosures, foreclosures are more prone to issues. Because if someone wasn’t paying their mortgage, there are other bills that maybe they weren’t paying other judgments that could come up. And, you know, depending on how that recommendation occurs, it could prime a mortgage or it could be recorded at a time that affects the foreclosure, it could be recorded in a slightly different name and not picked up during the foreclosure process. So foreclosures are certainly an also you have a lot of constitutional requirements and service requirements for foreclosures, if those aren’t met, that could affect the title. The other issue is successions. So our probate if you’re outside of Louisiana, those can be problematic, too, for a couple of reasons. One, again, you have procedures that have to be followed. And if those are not followed, then that can create a defect, too, you can have collusion and missing heirs, which has happened, you have an estranged sibling. And you know, the two here decide they don’t want to have to deal with third one in California. And so they just neglect to mention that there is a third one. Things like that have happened and do happen sometimes says successions are more prone to problems also. But older parts of town a lot of times you have weird alleyways servitudes that you don’t have, since we have planning and zoning ordinances and you know, new subdivisions where maps have to be recorded. So there’s a little bit of both. Okay, while
we’re on that alleys and things like that title insurance also can get involved when there is a boundary dispute, right. So in Louisiana, we don’t have to have a survey done to do a closing but I think in other states they do. But title insurance, how does it come into play if like, the fence is in the wrong place.
So there is survey coverage on the advanced owners policy. There was not survey coverage on the regular policy, survey coverage without having to have a survey done. And let me preface this is for residential for commercial, that’s a whole different world. But I recently had a really terrible survey issue situation out in ascension, where people bought this property, I don’t know, almost 10 years ago, and there was a pool house and a pool that was all built when they purchased it. And as it turns out, and I never would have found this 10 years ago when they purchased but the technology has gotten much better with the assessor’s office. And so now we’re able to look at the assessed property and see where it sits. And so when we looked at that, we could see that the pool house and about 50% of the pool were built on the HOA property and not within the lot. Wow. And right on top of a parish drainage servitude, and they did not have the advanced policy. There was no survey coverage. There is a deductible for the survey claims. And I think it’s like, don’t quote me on this. I think it’s $5,000 so it can be substantial. But if you have a big survey issue, right with ownership involved like this one 5000 might be a drop in the bucket.
Hey y’all Katie here in Episode 188. We cover all of the tasks you do in your business and how often you do them. We share the full task frequency list in time management for agents 101 Right now you can get time management for agents 1013 When you purchase the database course before March there already first, you can find that at the database course.com Or at hustle humbly podcast.com/courses.
So even if you have insurance, what does the title insurance do when there is a pool on property that is not yours? How does that resolve? Well,
so the goal of the title insurance is to either cure the defect, or make that party whole again. So it’s either to buy the house back, or buy the land that the excess that the encroachment is on. And there’s a lot of different ways to make a person whole. And so sometimes it’s making them whole in a way that they don’t want to be. They don’t get to decide the title insurance company gets to decide how to make them whole. But there’s a lot of ways to skin that cat,
right? Mm hmm.
I’ve had one like that in ascension now that you when you start to say that, like, was it mine, but it wasn’t, but with the pool, and there was a big, vacant lot behind it. But things were not really where they were supposed to be, it ends up being two lots instead of one, or like a house that straddles two lots. I mean, that’s pretty
common. It is it is. And so, you know, up until recently, where we could look at the assessor’s website and see, because of all the GIS maps, see the improvements. And we have made that part of our routine title work. Before that, I could not tell if a house straddled the line, right shot on the lot. Now we can yeah,
I’ve started including in my email template on new contracts for buyers, that you may want to think about a survey. If you have any questions or concerns, this is up to you. It’s not required. Because I do think especially with fencing and things like that, I’ve been encountering more situations where it’s unclear. And the only way to really know is to have a survey and I just wanted on record somewhere that I said, I suggested I suggested it, it’s up to you. But you may want to think about it. There are a
few agents who sell exclusively in the older parts of town like Spanish town where they will require their buyers to get a survey.
Oh, that’s where most of my issues have been the oldest part of town when the sometimes you have three layers of fences, because you know, this neighbor put up a fence and they wanted this kind of fence on this side. And you just don’t know where everything is. And it’s you don’t know until you get a survey.
And you and I might not think six inches are important, but a lot of people think six inches. Right? Right. That is
very true. So true.
Okay. Let’s move on to the scary, scary topic of wire fraud. Okay. This, it’s the big bold letters. The other color, like every title office, you get now says no, be aware of the real. Being them signing. Yes. Tell us about wire fraud. What is happening? How often is this really occurring?
So I googled yesterday to do some research nationwide. It is a topic that comes up over and over again, at all of our industry conferences. And actually I found a nor statistic. There was $6.9 billion in losses in 2021. And a lot of money and an average of 2300 complaints daily. Oh, it has occurred in every State of the Union. And as classified by the FBI as a major threat to our economy.
I literally every single
state. I know like it’s so disturbing. It’s very disturbing. And it’s also one of those things where, you know, you hear about it all the time. And then you just kind of think it almost be like that’ll never happen to me. Right? It almost becomes normalized, like Okay, watch out for wire fraud, and then you hear about the devastating effects of someone that it happened to and it becomes real.
Tell us what happens.
Okay, so normally what happens in this case, what has been happening, it changes daily, they’re getting better and better as you find a way to prevent it, they find a way to do something new. But a criminal actor will basically hack into an email, and then they will lie in wait, they will watch those emails. And I think that the last statistic I got at our American Land Title Association conference is that they may watch for like 160 days, oh, they actually are able to target something. Once they are at a point where they can target something, they will insert themselves into that process and start emailing back and forth as if they are a party to the transaction, either the realtor or the title company or the lender or whomever. And so the the person that’s part of your transaction thinks they are in interacting with a poor another party to their transaction when in fact today or not.
To me while I was in your office, actually, and you know, someone from the office came was like, Katie come out into the hall. And I’m like, they’re like, did you send this email? I’m like, No. And you could tell, but also, like, I always send my emails. Have a great day. Yeah. Right and right, I would never
do that. I
would never do this.
But you know, it’s really great to have something like that, that you know, distinguishes you, right?
I’m like, This is not from me. But have you had people have you caught them? Like before? Like it’s about to happen? Yes. stopped it.
Yes. Very fairly regular basis, actually. And so first, I want to say there’s a big stigma surrounding this, okay, nobody wants to talk about it. Nobody wants to talk about, we got caught in this, because then they’re embarrassed and like they’ve done something failed. And maybe they have, and maybe they haven’t, depending on the circumstances. But until we start talking about it as an industry, and we start sharing our stories, it’s gonna be hard for us for it to get stuff, right. Because people don’t believe it’s really happened. They don’t, okay, they don’t keep it. So a big problem that we have is we have all these processes in place, but they only work if everybody adheres to them. And within our office, we adhere to them, because we are terrified of, you know, assisting and losing someone’s money. But buyers and sellers don’t know they don’t take it seriously. They don’t feel like they have the time, they feel like we’re wasting their time. And so they will do things that they probably shouldn’t do that or it gets the policies and then that’s when these things happen.
Okay, here’s an example of something that a buyer or seller would do against the policy.
Okay, so I’ll give you an example of an actual loss that happened in our office. First of all, our first one was in 2015, before we even knew this exist. Okay, so that was your first sighting. That was our first sighting and our first actual loss because we in 2015, nobody knew that this was happening, right? Okay. The next one happened in 2017. And by that time, we had processes in place. Sure, and our process is included, emailing the person and telling them, we are going to email you these wiring instructions to the buyer, we’re going to email you our wiring instructions. And we’re going to immediately follow up with a call to this number that you and I have been speaking on. And we’re going to confirm that what you received in your email matches what we sent from our email. Okay, okay. And so the first time this happened, it was a very busy man. And he said, he didn’t have time for all this nonsense. And we were insistent that we do this. And he complied. And so we did the callback, we confirmed he received what we sent. And we said, you know, we will not change these, this is where your money is to go. Next thing we know, and we were dealing with his office email, which was encrypted. And so that’s great when you’re dealing with someone else, your encrypted email and someone else’s encrypted email. But in the meantime, he decided he was too busy for this and that his wife needed to take care of it. So she called she had a Gmail account. And we went through the same process with her, and everything was fine. But then they received another email after the first two emails and after the first two telephone conversations, and when they went to the bank, instead of looking at it, they just opened it and showed it to the teller. So the money was sent to a bank that was not our escrow account, holding bank. And about a day later, he happened to call and confirm and we said, we don’t have your wire, when did you send it? And he said yesterday about noon, and it was maybe three o’clock the next day, and we said something is wrong, you need to stop right now and call your bank and find out where this wire went. And he did he called his bank and it had gone to USAA we do not bank at USAA. And so immediately it was Chase and chase submitted requested that the wire be refunded which if you do it within a certain amount of time, minutes or hours, you might be able to get it back. This was not minutes or hours it was more than 24 hours. So at that point, they have to submit a fraud report to the other bank and to the FBI. There has to be some investigation that happens and then after the investigation if it’s determined that it’s fraud, the money comes back USAA happened to have some pretty good policies in place and they had flagged this because the little lady involved in money mule so it didn’t go directly to the criminal it went to an unwitting money mule
I’ve never even heard this term either. Go
so basically they duped someone into thinking that they’re getting this money but they’re only getting part of it and then they have to send the rest of it on via some other way to the criminal actor who they don’t think is criminal they
think is right they think it’s like their long lost uncle. Yes. Okay. Yes
are some sort of scam job scam M loves scam, there’s there’s a lot of different ones. And so the lady went to the bank, it was half a million dollars. And she had never had more than $5,000 in this account for the 30 years she’d had this account. And so they flagged it as unusual. And they only gave her $12,000 and told her that she would have to wait 48 hours for the rest of it to clear. And so within that 48 hours the fraud report came in. And they refuse to disperse it and eventually sent it back to chase. And our client did get all his money back except for that 12,000 Oh, wow. So he lost $12,000 He lost $12,000. And he considered himself lucky to have lost 12,000 died, he definitely should. He acknowledged responsibility in it. And it worked out as well as it could have under those circumstances. But it was a frightening write today.
So one thing that you mentioned is the email account. There are so many agents out there that are nervous about having their professional email account with the broker in case they switch companies or whatever the they want to brand themselves. So our Office requires us to use the office email because of insurance it can void the insurance that they have on us if we use a personal email account. So what did you mean by encrypted and what kind of email accounts the reason
that your office requires you to use your office email and insurance is void without it is for this reason, okay. So your Gmail, your Yahoo use, those are much more susceptible than a company email where you have someone encrypting partially or totally. And so agents who are using those G mails are putting themselves at risk. You know, they really are because those are much more hackable than your company accounts. And encrypting just means checking, verifying, encrypting can mean a lot of different things. So for us, when we get an email from someone that we’ve never received an email from, before we get a flag, when we get an email that looks suspicious for any reason, we get a flag and there are all these identifying things that will flag us that there’s something unusual about it, we get tons of phishing emails, and I mean, the layers of security that we have to pay for to make sure that we’re avoiding this. And a lot of times, you know, I’ll make the mistake of deleting an email because I don’t want to take the risk. And then someone will call and say you never responded to my email.
Your attachment looks sketchy, I did not open it.
Right, I guess I would rather err in that direction than in the opposite. But sometimes if I get an email from someone I know and it looks fishy, I’ll delete it and and call them and say, Hey, I just want to make sure did you send that. But if it’s somebody you don’t know, that’s where the problem comes in, send most of your company email, they probably have some security features like that, that are going on behind the scenes that you may not even know about.
I get some notes and things like that through it’ll say just want to make sure you understand you’re sending this to someone outside of your organization, or that doesn’t match anything that you’ve ever sent before. So I do get little notes in my email when I’m sending things. Usually if I have an attachment
your company because it’s a big company and they understand the risk, they probably do something like we do they probably employ someone to send fake phishing emails to see which one of your people are going to open. Yeah, yes. Yeah.
we do that too.
Right idea like undercover. It’s like your secret
shopper. Yes. Why?
That’s so interesting. Okay, wait,
I had a question about the wire fraud and now it’s leaving me Okay, well, how can we avoid wire fraud? So there isn’t a consumer really as well like what can an agent do? What the consumer do? It all boils down
to being very careful and to basically verifying and re verifying before you send any money to anyone you know, and so what I encourage people to do is first of all, if you work with the title company on a regular basis, ask them who what bank their escrow account is. And so if you know that, you know commerce title our escrow accounts are with red river bank and investor bank. And your client says oh, I got this email from Commerce to send some you know money to Capital One you’re gonna know that is not that is and so you know, for them to just confirm with a number that they have independently verified. So as a consumer, let’s say you’re wiring money to someone I just wired me for a vacation I was a nervous Nellie to do it. Confirmed and reconfirmed and googled and found Forbes articles and you know, I was very sensitive to it. But if you independently verify a number, if you Google somebody’s number, you never want to use the number on the email they give you because they’ve gotten bad or they’ve started to include numbers on the email. So you can’t throw the ball and say, I want to make sure you sent me this email. They’re making
everything. So you will,
billion dollars to you.
Yeah, right there. They’re so smart.
I can’t they use it for good instead of evil.
I actually found myself on the phone with a hacker and realized halfway through what was happening and sort of being like, you are so smart, you do not need to be doing this. There is a better way, and he hung up. But I was so aggravated to work on
your skills of persuasion, I
guess. You lost that negotiation?
Where is your mother? Being
being wary and verifying and double checking, it never hurts to be paranoid and ask more questions and do more due diligence. That would be my suggestion for consumers and for agents and for buyers. Yeah.
And it’s sometimes the money is just gone most of the time, right.
So in our first instance, in 2015, before this was a thing that we knew what had happened, there was the we had been communicating with the sellers agent who had power of attorney for the seller, and it was someone local that we knew. And he had basically provided us with the loan number or provide us with all the sellers information, we had very little contact with the seller himself. The agent showed up at closing with wiring instructions we were before we could wire the money. We got an email from the agent saying my seller has decided he’d rather his funds go to his Capital One account, then his regents account, said okay, so you sent the money. While about two days later, the seller called and said, I still haven’t received my water. And we said oh, well we sent to this account, your agent asked us to, you know, change. And he said I don’t have an account there. Yeah. And what happened in that instance, was it went directly to the criminal. And they immediately withdrew the money from the account and closed it. So it was gone. I think that banks have gotten better about that now. They’ve gotten better in a couple of ways. There’s also a movement to have banks match the payee on the wire with the with the account holder, which currently does not exist. I’m sending money to Alyssa Jenkins, I can send it to Katie Caldwell’s account and the bank doesn’t care.
Yes, terrible, like safety protocol. 101. Yes.
But they don’t want to make that adjustment. And that would help tremendously.
Why don’t they want to make the adjustment because they want the money? No,
because they say that it’s too hard to police that if your account is in the name of Alyssa and Tanner Jenkins, and we just sent it to elicit Jenkins, then they’re gonna have to send it back because it’s not an exact match.
Well, they do that with checks. I know. That’s wild. Okay.
My work. So yes. If it’s going directly to the fraudster, they are taking that money out immediate, right. But if you have a money mule, some of the banks have analyses in place where they can flag transactions that are outside of scenarios more
common now. What? Is it kind of even split? Do you even know? I don’t know. Yeah,
I had an elderly client whose wife passed away. And he was taking it very hard and got an email. I was talking to his son about it. The son told me that they didn’t realize this was going on. But after you know, the mom passed away, his dad received an email from someone checking on him, I care about you, it was all a big scam. And developed basically like an online relationship friendship. And next thing, you know, he’s sending money and and became a money mule. And they had to get authorities involved. And it was just, I guess they just prey on the vulnerable, vulnerable people. Yeah. And I know, we wanted to also ask if there was any other, it seems like as technology increases the complexity of the scams that are occurring, we’ve been having instances where if someone is on phone duty, they’ll just get a random call that says I own this piece of land, and I need to get it listed. But I live in another state. What do we need to do? Oh, that’s okay. It’s just a piece of land. It’s not like I have to meet you to walk through the house. They do all the paperwork electronically. And next thing you know, they’ve sold a piece of land that that person never even owned. Are y’all seeing things like that? Yes.
And so a lot of this has to do also with technology and people not being present to sign anymore when someone that you’ve never met wants to sign via a power of attorney that’s an immediate red flag for me. Okay. If they were in town and you listed there that’s that’s one thing. Yeah, but If you get a call on phone duty from somebody who says I have this piece of property I inherited, I never lived there, I’d like to sell it, I’m not going to come in for closing, that’s going to raise a lot of red flags. And so for powers of attorney in Louisiana, they have to be signed before a notary into witnesses. And so that can kind of make things a little easier for us with a little less fraud here. That’s not the case in all states. But what we have found is that you have a lot of notary fraud too. In other states, people are just going to say there are a notary. And so we just need the little stamp,
We have used a vetted company, to do our notary work in other states where we can’t be and that notary is basically owned by one of the title insurance underwriters so that it’s insured. Yeah, the problem with it is that it’s expensive, because guess what, they’re vetted, and they’re insured. So it’s going to be more expensive than going down to the Piggly Wiggly and getting somebody to notarize your documents. Yeah. And so we get a lot of pushback from people. Well, it’s too expensive for me to use this service. I just want to use my own service. But there’s a reason that we push it, it’s because we’re trying to avoid fraud.
And I do think that’s where we as agents need to do a better job of communicating with our clients why this is so important, so that they don’t give y’all so much pushback,
that would be helpful,
would be helpful. That’s the problem. I am like, as soon as the wire comes up, I am freaking out and telling my client, these are the rules. But I’m not just putting it as a bolt in the bottom of my email, I am calling them and I’m saying are you considering a wire, these are the things that may happen, this is what you need to do. Like you have to talk to a human that we know is the title office go in person, ideally, I’d like you to just go in person.
So a lot of banks will require because of all this fraud, they will require their account holder to physically go into the location in order to wire money, at which point they can ask them some questions about you know where this money is going. But I know that like if you have a US Bank customer, or Wells Fargo customer, they’re not even here, they’re not here, they’re gonna have to go to the nearest branch out of state and get that money wired. So the banks are trying the title companies are trying, I just think that the general population doesn’t understand the risk yet. And so that’s where a lot of the pushback comes from. So we have had, you know, some potential fraud situations with powers of attorney. And that always makes us very nervous. Another upcoming fraud situation is with payoffs. So we, you know, if a seller has a mortgage, we’re going to have to pay off that mortgage at closing. And so the process requires us to ask for a loan number, we also have to get them to sign something consenting for us to reach out to the mortgage companies mortgage company to communicate with us about their account. And so once we do that, we send that off, and we expect to pay off. But if you have the hacker watching that account, watching that email transaction, then they can easily interject themselves as Wells Fargo and say commerce title, here’s the payoff, send it to you. Okay. And so one of the things that we do to combat that, and there is a recent instance with the title company in town who lost some lost to pay off through this and a lot of them are very good. Sometimes I used to be that the payoffs would come through and you’re like, No, this does not at all look like what a Wells Fargo payoff looks like. Right? Right. So it looks like a kindergartener made it Yeah, they have gotten very good at matching those payoffs. So what you need to do is either have a template in your online banking system where you know, every time I wire to Wells Fargo, this is where it goes, I don’t have to put it in and over and over again, because historically, this is where it always goes. And so if those instructions don’t match what is in your template, you know, you have to start asking some questions, or there’s a problem, or have some sort of pay off bank where you know, you can refer to it every time to look and see that it matches what you have sent in. But that is a real problem that’s coming up now where they are interjecting themselves as the pay off lender when in fact they are not.
Hmm. With the power of attorney situations. And you mentioned how difficult it is to get everybody together in one room are remote closings. Do you see that being a thing in the near future? Are some places doing that? Yes,
that train has left the station right and it’s happening. COVID really,
it’s really happening here is it’s not
and here’s why. So, in Louisiana, we have to have the notary and the two witnesses. And there’s been a lot of pushback, because, you know, as with everything in technology, there’s a lot of fear surrounding it, and people feel like well, we’re gonna lose our jobs. If we don’t, you know, if we can’t do this the way we’ve always done it, but the security that goes along with those remote online closings is actually far more secure than what we’re doing now. Well, I would take that they’re not just taking a photo ID. They are taking that ID and they’re matching it to various like a database. Yeah, yes. Okay. And so it’s going to ask like a lot of them have technology that asks five questions. What was the first core you own was the first address you looked at? Things like
that? And the answer that, oh, gosh,
you know, it’s funny, you say that normally, they’ll give you like seven questions, and you have to get five right or something like, all right. But those are actually much more secure in terms of what they require. And that is going to happen. At some point. There has been legislation presented every year for the last few years, and it hasn’t passed, but it’s being re altered and resubmitted on an ongoing basis. So at some point, remote online notarization will happen. What do you think about it? I think it’s great. I’m all for it. I think that it would make things more secure. It would make things easier for busy people who can’t get there. You want to close in your pajamas. That’s great. Yeah, it’s operating in a lot of states. And in most of those states, it’s operating pretty well.
Yeah. Well, that’s kind of nice that it’s happening before it comes to us. We can Yeah, get make sure
we are testing some procedures so that when that happens, it’s ready to go. In Louisiana, you can do remote online authorization, but just not for a movable X yet. So we have licensed ourselves with the Secretary of State has remote online, notaries, our software has just implemented a system where we can do some things that way. And so things that don’t require the Two Witnesses are that aren’t actual transfers. We’re starting to test that out so that we’re ready to go. Once the law allows for it.
That’ll be good. Yes.
Okay. Let’s let’s jump to navigating difficult closing. We’ll end on a real Hi, yeah, you know, now you’ve lost your money and your lines are wrong. And we have so much trouble in title. But the people show up and they’re just mad. Well, I mean, how do you handle this? How can agents help you like they’re angry? They’re trying fist fights? Have you had a fist fight?
I personally have not had a fist fight. Those have happened in my office and
why I have sat through a handful of awkward situations. And there’s no one else I want conducting that closing then Nikki?
Right. But like, what do you do? How do you? Do you wish that the agents would give you like,
a heads up? Yes, yeah. Yes. And and a lot of times, they will, a lot of times they will call and say my seller just lost her husband, and she’s very emotional, and they’ve lived in this home for a long time. Can you give her some extra k? Or can she have a separate room or something like that? Or, you know, my seller is a drinker. And we really need to do this in the morning before things get out of hand, and he doesn’t have capacity. So yes, the heads up is always appreciated. There’s a problem. There’s some animosity, but I will tell you that nine times out of 10 when buyers and sellers don’t get along, and they’ve never met, and then they sit at that table, the dynamic changes. Because once you have to look someone in the eye,
you’re not so big and strong. That’s why
well, and I feel like a lot of times emotions get in the way and buyer’s or seller’s develop this picture of what the other person is like. And then when they meet them in person, they realized they were just wrong. It really isn’t that way. Sometimes
the agent’s behavior facilitates that incorrect
100%. I know for a fact. Right? So that happens. So
a combative agent can create a combative client, right?
Yes. So it is the same thing with attorneys and their clients. Your job is to keep the emotion out of it in a very kind and respectful way. So yes, she just lost her husband, but this is still a business transaction. And so your job is to keep everything business light to the extent that you can and keep the emotion out of it. Some people can’t help themselves, because they’re just emotional beings. And they bring that personal level of emotion into the transaction. And those people make it worse instead of better, right. And they don’t even realize what their day down. Yeah, they don’t. But you know, for my purposes, I just like I think if you make every if you let everyone feel heard, then you’re able to first of all, develop some trust. And once you develop that trust, it’s easy to move forward and to negotiate, you know, some sort of compromise, but until they feel heard until they feel like you know what their stance is whether it’s full of emotion or not, you’re not going to get anywhere.
Have you ever had people get up and leave and not come back? Yes. Like it gets into like a legal battle.
Yes, I have had people leave and not come back. Most of the Wu’s were around the time of Katrina. So emotions were extremely high. That is a rare instance, usually we’re able to draw them back to the table, maybe not in the same room. You know, it helps to offer a separate room, especially now that they’re embarrassed that they’ve done this. But during Katrina, we had a couple of instances, but I chalked that up to just emotions were extremely high, and there was no way to avoid it. And
it’s a big decision question for you. In some states, it is not customary for the parties to be in the same room. Do you like everyone in the same room? Or is it neutral to you? Or what do you see the benefit of having people in separate rooms?
So before 2015, when we had all the best practices changes? You remember this? Everyone showed up at the same time? Yeah. And it was either really great or really terrible, right? And if even if it was really great, and everyone was talking, it still was hard to get the buyer to focus on science. Yeah, so after that, when the law required us to provide some financial privacy for that buyer, and we started asking the seller to come 20 minutes late, I noticed a lot more efficiency, and that it became a lot more pleasant for everyone. Because if you have that first time homebuyer, yes, they are excited. Yes, they want to talk about the mailbox and the trash days, and all that kind of stuff. But they also want to understand and they’re nervous about signing a new 30 year mortgage. So this gives us some time to get them comfortable, make sure they understand everything. And then by the time the seller comes in, hopefully is that it is a lovely situation, where the seller is glad to sell to this buyer and the buyer is delighted to buy from the seller. And so I find that that’s kind of the best of both worlds where we do have that privacy and that time by ourselves with the buyer, but at the same time they do get to meet. Okay, I
used to hate closings you did, because I didn’t like I well, I don’t really like small talk. I’m not the greatest at it. And I’m also just thinking about what’s next. What do I have to do what’s in my email, right? It’s not an efficient use of right. It’s just it’s hard for me to sit there and the days before TRID when sometimes you didn’t get the final, I would show up for closing and be like, hey, the lender still hasn’t sent the package. Let me tell you I had to close oh my god closings that lasted for hours while we were waiting. So I very much once trade started happening. And once sellers coming a little bit later started happening. It was just so efficient. So game changer. Yes, I and I agree. I think it allows the buyer to get the questions asked and understand what they’re doing. And then when you step out to go make copies and scan everything that is there time to say when is trash day and to figure anything out. Right?
Well, I will tell you, the two of you are delightful to have in closing. Alyssa sits there very quietly and works on her computer. Like she’s not even there, right? And Katie is very pleasant and pleasant. Yes, I’m going to engage all of our forever. Yes. Some agents will come and insert themselves the entire time and start asking, Well, you know, have you told them this? Have you told him that? I’m trying to get my job right now? Can you just say no. Or they’ll start asking questions like, well, what are you going to do to the house or you know, When are you moving in? And so it’s very disruptive to the process. But the two of you are wonderful to work with.
Thank you. When you leave the room, I do close my computer. I mean, I just tried to like you’re just not trying to get in the way. Right. I like the mayor thing. They’re there.
Okay. I think we’re good news. So, so helpful. It really is a lot to take in and understand and we have a lot of new agents that listen, so I hope that it was helpful for them. Did you bring attempts today? I did. Oh, right.
So Yesterday was National Women’s Day, right? Yes. Okay. And there are two women in the field of real estate that I feel like a need to be toasted. One is Mary Ladner of Mary Ladd Yes. Works with Ulisses company with Lateran bloom. And she has been an agent for I believe, 58 years and eight years, just this year, she did not renew her license. But when she started there were very, very few female real estate agents. Wow. And she told me this great story where when she was recruited, her boss said I would like you she was just an office assistant to be an agent and she said, but there are no women agents and he said I don’t want a woman I want a lady. Oh, and we all know Mary Ladner and she’s a very lovely deals with lady who is a very strong lady.
if I say she is my first taste, my second is Linda Gaspard very similar reason. Linda was told that She would never be successful because she had six children. And you know, both know she’s incredibly successful and incredibly strong woman. So those are my two.
Those are late. Okay, here’s Kolenda and Mary. Thank you, Nikki,
thank you for having me. It was
wonderful. We could talk all day. I know. I had to like rein myself in too, but maybe we’ll have a second. Okay. All right. Hi, everyone. Thank you.
Thank you so much for tuning in to the hustle humbly podcast. Let us know who we should toast to for the next episode.
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