Mortgage Transaction: The Responsibilities of the Escrow Holder

by Kelly Richardson
LoanPage.com Columnist

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The process of obtaining a new home loan requires a collection of trained professionals each handling a small portion of the mortgage transaction. The escrow holder is one of those positions. Here's a summary of escrow, the escrow holder, and the holder's responsibilities during the mortgage process.

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The primary thing you need to remember about escrow is that it is a protection for you. Escrow is a legal process by which assets are transferred from one party to the next. Because the new home loan process is so involved, an escrow holder is charged with collecting assets until every tenant of the contract has been fulfilled by both parties. Then the escrow holder distributes the assets to participating parties per the mortgage contract. Escrow is typically associated with real estate, but the process applies to any exchange of assets with high values.

The Duties of the Mortgage Escrow Holder

  • » First Contact. If you are applying for a new home loan, the escrow agent will contact you and explain the terms of escrow as outlined in the contract.
  • » Impartiality. The escrow agent is not there to advise you as to whether or not the deal is good. They will simply execute the escrow terms as described to them.
  • » Who Chooses? Because the escrow agent is in the best interest for all parties, each side usually has a say in the escrow agent to be used.
Just like in any area of real estate, there are scam artists out there who pose as escrow agents and then disappear with funds. Here is how you can be sure that you choose the right escrow agent.

Choosing a Reliable Mortgage Escrow Holder

  • » Characteristics. When selecting an escrow agent for your new home loan, look for independent affiliation, experience, services, and costs.
  • » Verify References. The best way to ensure your escrow agent is reliable is to discuss their performance and service with past customers.
If you are looking for a new home loan or want to refinance your mortgage, selecting a good escrow agent is a first step in the right direction.

Sources:
Federal Trade Commission
RGS Financial Legal Services

About the Author
Kelly Richardson covers the real estate scene in major cities across the country. His articles appear in educational journals, periodicals, and e-zines.

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