If state regulators and the public truly understood how unguarded are the staggering amounts of money in title agencies and 1031 exchange companies, I suspect they'd take seriously the need for tighter control.
Here's a title agent who caused great harm:
The money is helping relieve some frustration that claimants displayed during Athey's sentencing. Cheryl McElhaney of Wyoming, Mich., spoke through tears during the sentencing as she addressed how Athey's actions had affected her.
"I am unable to ever recover," she said. "This is a life sentence. This is a lifetime debt now for me. By virtue of Nicole Athey's crime, I have become a criminal as well with collection agencies. Oh, what this low-life criminal has stolen from us.
"In terms of people devastated, probably less than 20 were seriously affected by it," she said. "A lot were under $200 (but) it could mean the difference between having your house or losing everything for people with low income."
Consumers should carefully select their title agent and not simply allow the Realtor or mortgage lender to make the selection. This doesn't mean that your Realtor or mortgage lender can't be relied upon for a good referral. I mean, simply, that you should also ask questions and shop around some before making your own decision.
Regulators who have not already done so, should reform auditing standards and licensure criteria so that bad actors lose the easy entry into the business and all players are more carefully monitored.
I don't know who is supposed to be keeping an eye on 1031 exchange agents but I do know title underwriters are supposed to watch their agents and they have been doing a poor job of it.
Nicole Athley could not have abused the escrow account to this extent if Stewart had been prudently monitoring her. Yes, Stewart has suffered a loss, but I have to say that title underwriters have taken the position of recent years that defalcations are a cost of doing business. It's right up there with fines and penalties imposed by the states. So far, they are able to absorb these costs and still not change their methodology.
This is an industry who has refused to police itself. Isn't it time somebody did?