Protecting Iowa home buyers from fraud

The Senate has taken another step to protect Iowa home buyers by addressing concerns about some unregulated closing companies, also known as escrow companies.  

In recent years, we’ve seen some serious problems in our state. For example, a closing agent in Emmetsburg told home owners that she was acting on their behalf to refinance their home. Instead, she changed the home owners’ address to her own post office box and funneled the pay-off funds to her personal account. Although previously convicted of theft, she was able to operate a real estate closing company.

In Polk County, the Wolford Group’s closing agents were involved in a complex mortgage scheme that deceived more than 200 homeowners. Wolford was charged with multiple counts of fraud. 

A closing agent in central Iowa failed to pay off the seller’s mortgage as required and did not pay all of the bills associated with that closing and several others. The lender was ultimately forced to pay off the seller’s mortgage.

Senate File 2348, which passed unanimously, will combat these types of abuses by requiring independent companies that offer real estate closing services to third parties to be licensed and regulated similar to mortgage bankers and brokers. 

The Iowa Division of Banking and the Iowa Finance Authority worked with lawmakers to craft this legislation to better protect consumers and reinforce mortgage regulation efforts. The bill has the support of the Iowa Attorney General, Iowa State Bar Association, the Iowa Bankers Association and others.