Escrow Committee Webinar We will begin shortly

Call In #: 1-877-668-4493 Meeting #: 927 435 436 Password: April132017 If you have a question during the presentation, please send a message to the presenter using the chat feature. There will be a portion at the end of the webinar where there will be a Q&A. We will try to get to as many questions as possible.

• This webinar is being recorded and will be available on our website.

If you run into technical difficulties contact WebEx support at:

1-866-229-3239

Escrow Committee Meeting Agenda Thursday, April 13, 2017

9:00 a.m. Webinar

Call in number: 1-877-668-4493 Meeting number: 927 435 436 Meeting password: April132017

1. Welcome

2. Approve Meeting Minutes from Oct. 19, 2016, and Jan. 12, 2017

3. Licensing Update

4. Examination Update

5. Enforcement Update

6. Old Business

7. New Business

Designated Escrow Officer test results

Committee Members Philip Dryden, Chair

Laurie LeMay Susan Berry TBD TBD

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

October 19, 2016 | Draft Escrow Committee Meeting Minutes 1

Escrow Committee Meeting Minutes October 19, 2016

Attendees:

Committee Members Present: Philip Dryden, Chair

Laurie LeMay Susan Berry Patricia Maddux

Consumer Services Division Representation: Cindy Fazio, Chief of Regulatory Affairs

Lorenda Lillard, Licensing Program Manager Steven Sherman, Enforcement Program Manager Rick St. Onge, Examinations Program Manager Devon Phelps, Financial Legal Examiner Ellen Daly, Webinar Facilitator Guests: *Guest list as generated by the webinar program – may not be complete.

Tammie Warnke Patricia Kirk Alga Robson Cyril Zoldak Kay Oliver Peter Stevens Shalini Chhabra Michele McGhuey Mark Kimber

Meeting Called to Order at 9:00 a.m. Welcome Phil noted the retirement of Scott Jarvis. He said the Committee appreciated Scott’s support over the years and wished him well in his retirement. Approve Minutes from July 14, 2016 Meeting By a motion, second, and vote the July 14, 2016 meeting minutes are approved.

October 19, 2016 | Draft Escrow Committee Meeting Minutes 2

Licensing Update Escrow Agent Numbers as of September 30, 2016:

58 Main offices (60 reported at July 2016 meeting)

9 Branch offices (9 reported at July 2016 meeting)

88 Active Escrow Officers (90 reported at July 2016 meeting)

59 Inactive Escrow Officers (55 reported at July 2016 meeting)

147 Total Escrow Officers (145 reported at July 2016 meeting) Escrow renewal mailing sent October 14, 2016. Contact at DFI for the time being is Kari Jacobson. Examinations Update Exams completed as of September 30, 2016:

3 Exams completed in July

5 Exams completed in August

2 Exams completed in September Common Violations Overdue outstanding checks Escrow Agents must take appropriate action prior to an outstanding check aging greater than 90 days (e.g. remit a due diligence letter to the payee when the outstanding check reaches 60 days outstanding). Internal Routine and Control Recommendations Please note the following findings are related to EARA requirements that became effective April 30, 2016. As the requirements are new, the Department granted the Agents a one-time exception and cited the findings as Internal Routine and Control recommendations instead of violations conditional on management agreeing to timely implement corrective action(s).

1. Information security plan

Per WAC 208-680-532, the Agent must implement a written information security plan tailored to its specific business model ensuring reasonable measures have been implemented to protect sensitive consumer information. At a minimum, the plan must:

a. Designate an information security plan coordinator b. Identify security risks c. Detail safeguards implemented to mitigate the aforementioned risks

10 Exams Completed from July – September 2016

2

October 19, 2016 | Draft Escrow Committee Meeting Minutes 3

d. Be evaluated on an annual basis 2. Business resumption plan

Per WAC 208-680-538, the Agent must have a written business resumption plan detailing the Agent’s response to and recovery of any event that results in the destruction to or damage of its books and records. The plan may also address other issues such as what actions will be taken if the DEO is unable to fulfill her or his duties for an extended period of time.

Enforcement Update

From July 1 – September 30, 2016, DFI’s Enforcement Unit received 3 complaints and closed 10 complaints. Investigations Investigations – Pending (EARA only) 13

Investigations – Open (all industries) 175

No Escrow Act orders issued in this period.

Old Business Following up with a July item regarding an increasing amount of title companies not getting their recording done promptly or waiting until late in the business day to process. This holds up client’s ability to move into their homes as Escrow Agents can’t pay out disbursements until the recording is filed. Susan Berry described how King County’s e-recording program will probably resolve this issue. Susan is following that process and will report back to the Committee on it. New Business 2017 Escrow webinar dates and times presented. All were approved by the committee and webinar information will be provided.

Thursday, January 12, 2017 9 a.m. Thursday, April 13, 2017 9 a.m. Tuesday, July 11, 2017 9 a.m. Thursday, October 12, 2017 9 a.m. Phil asked a question about the Rulemaking process and proposal for WAC 208-08. These are the rules that DFI uses in adjudicative processes. The Agency’s Rulemaking Docket can been found at: http://www.dfi.wa.gov/cs/current_rulemaking.htm

October 19, 2016 | Draft Escrow Committee Meeting Minutes 4

DFI will host a Pre CR-102 meeting via webinar November 15. The CR-102 is not anticipated to be filed until next spring. Meeting adjourned at 9:26 a.m. You may listen to a recording of the entire meeting at: http://dfi.wa.gov/escrow-agents/committee

January 12, 2017 | Draft Escrow Committee Meeting Minutes 1

Escrow Committee Meeting Minutes January 12, 2017

Attendees:

Committee Members Present: Philip Dryden, Chair Laurie LeMay

Consumer Services Division Representation: Cindy Fazio, Chief of Regulatory Affairs Lorenda Lillard, Licensing Program Manager Steven Sherman, Enforcement Program Manager Rick St. Onge, Examinations Program Manager Alan Leingang, Examinations Supervisor

Joepaul Wong, Examinations Supervisor Carolyn Sabin, Webinar Support Michele Gill, Webinar Facilitator

Guests: *Guest list as generated by the webinar program – may not be complete Mike Bykowski Lora Lilly Support (Cisco) Anna Yankova Michele McGhuey Tracey Batey Theresa Joepaul Wong Mary Duncan Theresa Williamson Summer Stahl Kae McDonnell Shalini Meeting Called to Order at 9:00 a.m.

Welcome Quorum not met, approval of minutes deferred to next meeting.

Licensing Update Escrow Agent Numbers as of December 31, 2016:

59 Main Offices (58 reported at October 2016 meeting)

10 Branch offices (9 reported at October 2016 meeting)

82 Active Escrow Officers ( 88 reported at October 2016 meeting)

48 Inactive Escrow officers (59 reported at October 2016 meeting)

January 12, 2017 | Draft Escrow Committee Meeting Minutes 2

130 Total Escrow Officers (147 reported at October 2016 meeting) We continue to see a decline in Escrow Officers now totaling 82. We encourage any qualified staff to take the exam so back-ups are in place.

Examinations Update Quarterly reports are due 1/30/2017. This is the second time using the EAQR Online Escrow Agent Quarterly Report System. As you know we developed this in house, so we have flexibility to revise the system. Comments or suggestions are welcomed for improvements. Please call or email Joepaul.

1 Exam completed in October

4 Exams completed in November

2 Exams completed in December

Average number of violations per exam: 2

Common Violations

1. Failure to clear old balances

Three Escrow Agents failed to clear old trial balance amounts in which they held no valid instruction to continue to hold the funds or all conditions had been met to disburse the funds to the appropriate party.

Enforcement Update From October 1 – December 31, 2016, Enforcement received 7 Escrow complaints, Resolved 6 complaints. Investigations: Investigations – Open (EARA only) 12, 8 are for unlicensed elements. Investigations – Open (All Industries) 154. Enforcement Actions—EARA Statement of Charges (Issued in Period) 0 Consent Orders (Issued in period) 2 Criminal Referrals 0 Final Orders (issued in period) 0 Civil Actions: (injunction, enforce subpoena) 0 Resolved actions against: Barrett Escrow and Preferred Choice Escrow.

7 exams completed from October through

December 2016

2

January 12, 2017 | Draft Escrow Committee Meeting Minutes 3

Old Business Charlie sends his greetings. He is testifying at a hearing this morning. Thanks everyone for taking the time to come to this meeting. In following up with an October item regarding the rulemaking process for WAC 208-08, DFI held two meetings for the rulemaking. The CR 102 has not been filed yet. The recordings of the meetings are available on our website. At a prior committee meeting someone brought up the OIC rulemaking for the Title escrow folks. That multi-year rulemaking project has not yet been completed.

New Business Phil asked about Legislature being open for business and if DFI had anything going through legislation. One request bill under Uniform Money Services Act- which covers Money Transmitters, Currency Exchangers and online currency exchange, to name a few. House Bill (HB) 1045 (Senate Bill (SB) 5031) was passed out of the House yesterday afternoon. The changes that are being requested codify our Virtual Currency guidance, and add a bond requirement for online currency exchanges. DFI is also looking at HB 1120 to amend agency rulemakings, including the Small Business Economic Impact Statement (SBEIS). That bill creates a few more responsibilities for OFM in assisting agencies that may have to issue an SBEIS. Charlie wanted you to watch for the next Industry Newsletter. Charlie’s Message will introduce a Cyber Security training in the Spring of 2017 for our small and medium sized business licensees. This in-person meeting will be held in Seattle/Tacoma area. Again, the focus is on small to medium sized businesses. A survey will be sent with the newsletter asking questions about the company and asking for specific areas of interest with Cyber Security. The organization putting on the training is a national organization. This is free to our licensees and we will be reaching out again to licensees for attendance. Please note on your survey that you are specifically looking for help with development of a plan. DFI does have some Cyber Security resources on our website. Meeting Adjourned at 9:21 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

April 13, 2017

3/31/17 12/31/16 9/30/16 6/30/16

Main Offices 58 59 58 60

Branch Offices 10 10 9 9

Active EOs 80 82 88 90

Inactive EOs 31 48 59 55

Total EOs 111 130 147 145

0

20

40

60

80

100

120

140

160

180

Num

ber o

f Lic

ense

s

Current Escrow Licensee Trends

Main Branch

Branch Offices

Active EOs

Inactive EOs

Total EOs

CS - Examination Unit Report Escrow Program

Escrow Committee Meeting April 13, 2017

Examination Summary

• 4 Exams completed in January • 0 Exams completed in February • 0 Exams completed in March

Average number of violations per exam: 1

Composite Rating

Number of Exams

Previous Avg. Exam Cost

Current Avg. Exam Cost

Exam Cost Change

1 2 $ 1,467.40 $ 1,500.00 $ 32.60 2 2 $ 1,965.71 $ 1,952.36 ($ 13.35) 3 0 $ 2,634.11 N/A N/A 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 during the first quarter of 2017.

Four exams completed from January through March 2017

Escrow Committee

Enforcement Unit Quarterly Report

January 1, 2017 – March 31, 2017

Complaints EARA Quarter

EARA 2017

All Industries Quarter

Received in period

4

4

329

Closed in period 5 5 340

Open as of 3/31/2017

EARA

4

Other Industries

232

Total Complaints

Open

236

Investigations Investigations – Open (EARA only) 13 Investigations – Open (all industries) 150 Enforcement Actions 1st Quarter CCSA 1 CLA 8 EARA 1 MBPA 23 UMSA 1 Enforcement Actions – EARA Statement of Charges (issued in period) 0

Consent Orders (issued in period) 0

Criminal Referrals 1

Final Orders (issued in period) 0

Civil Actions: (injunction, enforce subpoena) 0