Introduction to Escrow Regulations
Escrow is up to its neck in regulations. Yet, kickbacks within the industry are common and enforcement is difficult. The California Department of Financial Protection & Innovation’s Escrow Advisory Committee has said as much. Still, just last week more allegations of kickback schemes reared their heads in a lawsuit and countersuit between former Portfolio Escrow managing director Maria Trangelo-Molina and Portfolio, which is owned by Douglas Elliman.
Allegations of Kickback Schemes
Buried in the mudslinging is Portfolio’s allegation that Trangelo-Molina offered kickbacks to a number of local agents, Oppenheim Group’s Jason Oppenheim. Oppenheim is not a defendant in either case and told The Real Deal last year he engaged in a “legitimate structure” that was reviewed by accountants and attorneys. The allegations mirror those made last year by Portfolio Escrow against its founder, William Grasska. The Grasska-Portfolio litigation was quietly settled in December. Maybe Trangelo-Molina and the litigation with Portfolio take a similar route.
Lack of Transparency
Lost in all the lawsuits is the subject of kickbacks. Who is regulating all of this and is there adequate transparency for consumers? The answer to the first question is in the California Department of Financial Protection & Innovation, which has repeatedly told TRD across different inquiries made in the last year that it will not confirm any ongoing investigations. The subject of visibility of enforcement actions cropped up in December’s Escrow Advisory Committee during which committee member Barry Sender of Village Escrow Services questioned why the DFPI could not make public statements about alleged violations.
Challenges in Enforcement
The committee acknowledged in that same December meeting it’s a “recurring concern” for the industry and it continues out of either “ignorance or deliberate noncompliance,” according to the meeting minutes. Committee members also admitted the challenge in enforcement with cash kickbacks made discreetly, offering a barely visible trail of evidence for investigators. “Investigating these violations is challenging,” the committee’s notes said, “as companies continuously find new ways to structure kickbacks to avoid detection.”
Coldwell Banker Realty, Beverly Hills Estates Get New Leadership
There’s big news out of Coldwell Banker Realty: Tom Dunlap will be stepping down as managing broker of the Beverly Hills and Hancock Park offices. His successor is Matthew Clayman, who comes from the Beverly Hills Estates. These are major moves for Dunlap and Clayman for different reasons. Dunlap is an industry veteran, who served as president of Jon Douglas Real Estate Company’s mortgage subsidiary Jon Douglas Financial. He was also vice president and general manager of Prudential California Realty, executive vice president and branch manager of John Aaroe Group and broker associate at Berkshire Hathaway HomeServices California Properties.
Fire Recovery Contracts Runaround
How many dashboards does it take for a city to be transparent? Let’s add that to the list of questions piling on when it comes to contractors getting paid to help the city of Los Angeles in its recovery from the Palisades fire in January. Residents and even some on the City Council can’t get a straight answer on how much Hagerty Consulting and AECOM are being paid and for what. That’s why the Ad Hoc Committee for LA Recovery is now waiting for the full council to pass a motion to extract that information from the Chief Legislative Analyst, Chief Administrative Office and Emergency Management Department.
Mayors Offer Local Take on CEQA
Local governments are scrambling to make sense of the latest exemptions to the California Environmental Quality Act. Most would agree the changes are a win for housing broadly. Whether there’s a raft of development waiting in the pipeline that’ll get the greenlight based on these exemptions, it’s too soon to tell. A panel held in Costa Mesa last week of Orange County government leaders seemed hesitant to call the changes a win from their standpoint. Their comments pointed to the larger and ongoing debate around local versus state control and who ends up having to foot the responsibility for execution and compliance of new laws.
Hilton Hilton Rising
Among some of the more recent headlines for LA resi was the $77.5 million listing of Cary Grant’s former Beverly Hills estate. Yes, it’s a big price tag for 9966 Beverly Grove Drive and most reports seized on the dollar amount and property lineage. One detail that was missed? The listing agents. Christie’s International Real Estate’s Aaron Kirman is co-listing it with Hilton Hilton’s Denise Moreno and Gordon MacGeachy. Rick Hilton, co-founder of Hilton & Hyland, launched Hilton Hilton in March 2023 with son Barron Hilton and Barron’s wife Tessa Hilton.
Gene Simmons Scoop
A Benedict Canyon home once owned by Gene Simmons got real on price and found a buyer last week. TRD broke the news that Berkshire Hathaway HomeServices California Properties’ Todd Marks represented a local industrial developer in the $28 million purchase of 2650 Benedict Canyon Drive in Beverly Hills. The property was sold by an entity managed by Max Nobel, which bought the home from Simmons in 2021 for $16 million.
Conclusion
In conclusion, the regulated world of escrow lacks transparency, and kickbacks are a recurring concern in the industry. The California Department of Financial Protection & Innovation has a crucial role in regulating the industry, but it needs to do more to ensure transparency and enforcement. The recent allegations of kickback schemes and the challenges in enforcement highlight the need for more effective regulation and transparency in the escrow industry.
FAQs
Q: What is the main issue with the escrow industry?
A: The main issue with the escrow industry is the lack of transparency and the prevalence of kickbacks.
Q: Who regulates the escrow industry?
A: The California Department of Financial Protection & Innovation regulates the escrow industry.
Q: What is the challenge in enforcing regulations in the escrow industry?
A: The challenge in enforcing regulations in the escrow industry is that companies continuously find new ways to structure kickbacks to avoid detection.
Q: What is the role of the Escrow Advisory Committee?
A: The Escrow Advisory Committee provides guidance and advice to the California Department of Financial Protection & Innovation on issues related to the escrow industry.
Q: What is the latest development in the escrow industry?
A: The latest development in the escrow industry is the allegations of kickback schemes and the challenges in enforcement, which highlight the need for more effective regulation and transparency.
