Consumer complaint received 2018-06-01
Company: FIRST AMERICAN FINANCIAL CORPORATION
State: WA
Product: Mortgage
Sub-product: FHA mortgage
Issue: Closing on a mortgage

Complaint:
Our FHA Loan closed on XX/XX/XXXX and XXXX XXXX XXXX XXXX ( XXXX ) was in charge of the Escrow Closing. Our Escrow Agent, XXXX XXXX, was signed on as of XX/XX/XXXX to handle ALL documents, funds and payments of Escrow. XXXX XXXX DID NOT finish Escrow and allowed the Lender, XXXX XXXX ( XXXX ) to receive funds and waive our rights to a final inspection, without our knowledge, causing us severe damages. These damages could have been prevented, if she would have followed ALL instructions at Closing. 

XXXX XXXX allowed XXXX to waive our final inspection REQUIRED after " works '' for Repairs were done. XXXX  waived this right on XX/XX/XXXX without disclosing this to us. It wasn't until I did a QWR in XX/XX/XXXX that this was finally disclosed to us. 


All changes to the Purchase and Sell Agreement had to be in writing. I have asked both XXXX  and XXXX for the disclosures to show they put the waiver of the final inspection by the ORIGINAL inspector in writing and neither company can provide this. 

The Holdback agreement for repairs states : " Another inspection, completed by the original inspector AND satisfactory to the Lender will be required, before ANY funds SHALL be disbursed by the Escrow Account. '' XXXX XXXX released funds to XXXX the Closing Date XX/XX/XXXX. Repairs were not finished until XX/XX/XXXX, therefore violating her Escrow agreement with us. 

XXXX was to disburse ALL funds by ESCROW CHECK or Wire Transfer to the contractors, brokers, etc. XXXX is a third party that was not allowed to receive funds for other contractors, unless we gave them specific instructions and disclosed on closing documents. Since this was not done, This gave them the power of Fiduciary over our loan and the capability to be self-serving and protect their interests, not ours. 

Any changes to the contract had to be approved by us in writing. The Holdback agreement was updated by XXXX on XX/XX/XXXX, and signed by us. At this time, the final inspection and XXXX appraisal were still required. They did not disclose they had already waived our right to the final inspection or that XXXX would not require one to be done for the water intrusion damages. It took us 4 years to figure out why the " works '' were never inspected, as required by ALL contracts. These water intrusion damages have affected our living conditions with mold, moisture and possible structural damages. 

XXXX attorney XXXX XXXX stated in his investigation, he was not able to find any mutually executed instruction from the seller and buyers regarding WHO TO DISBURSE THE HOLDBACK AMOUNT. It is clear in ALL directions that XXXX is to issue ALL checks directly from Escrow. 

XXXX had sole authority over the Holdback agreement, ONLY because XXXX-XXXX XXXX gave them that authority. If the requirements were followed, XXXX would have had to sign the holdback to release funds after the inspections were completed, state who did the final inspection, then funds would have been released from Escrow to the Contractors after the Mechanic Liens were checked for. 
1. How did XXXX XXXX guarantee that XXXX  was going to take the funds and apply them appropriately to the contractors? 
2. How did she verify the mechanic liens were checked for? One contractor did not receive payment and had to contact me to get paid on XX/XX/XXXX. 
3. How did he verify the Original Inspector did the final inspection?

4. How did XXXX protect us by giving funds for contractors out of Escrow, to a third party that was not approved or disclosed to us? 
5. The original bid was to match the receipts, but they did not. How did XXXX XXXX allow this to pass. She did not have control of the Escrow documents. She released them to XXXX, which violates her agreement with us. 

The Seller and Buyer agreed that ALL REPRESENTATIONS AND INFORMATION regarding the PROPERTY and TRANSACTION are SOLELY FROM THE SELLER AND BUYER. How did XXXX breach Escrow? How did they convince XXXX XXXX to release funds that did not belong to them? How did XXXX XXXX allow XXXX interests to be put above ours? This would take collusion on both sides and is very self serving. 

We put our trust into XXXX and XXXX to do what was in our best interest at all times. Waiving final inspections without disclosing it to us and taking funds from Escrow and giving it to the Lender, without prior disclosure or our permission, is a breach of escrow. This allowed XXXX to finagle receipts and numbers, waive final inspections and do what was in their best interest, ignoring what was in the best interest of the client. 

If any Escrow/Title Company can change Contract Terms after closing, without disclosing it to their client, is very self serving and doesn't protect the sanctity of Escrow. We trusted that our contracts would be followed " AS WRITTEN '' and any changes would be disclosed to us. Small errors in Escrow cause major damages. XXXX-XXXX XXXX put XXXX interests above her clients and the contract we signed with XXXX. 

Every Document/Contract I have states that XXXX was to hold and disburse ALL ESCROW FUNDS and make sure ALL CONTRACTS WERE COMPLETED AS WRITTEN. We can not sell our home. The water intrusion has ruined the entire bottom floor. XXXX is trying to profit from our demise, by foreclosing on us. All our funds have gone for Attorneys to fight to get the Condo Association, who would have been responsible for this if XXXX would have had the final inspection to disclose the damages, were not fixed properly. Instead, waiving our rights, weeks prior to closing allowed for fraud. XXXX XXXX should have followed her contract and stayed neutral, ensuring everyone in this deal did their duties.

Company response to consumer: Closed with explanation