DATE: June 6, 2022
TO: Massachusetts Agents and Approved Attorneys
FROM: Thomas Flynn, Massachusetts State Manager
RE: Audit and Q&A Bulletin #2: Digital Funds 

Title industry trends continue to evolve, especially the popularity of digital depository applications such as Venmo, PayPal and Zelle. These peer-to-peer payments are replacing the traditional banking and credit infrastructure such as paper checks, wires, and certified funds. Millennials currently make up the fastest-growing segment of buyers today, according to a recent National Association of Realtors report.  Additionally, according to a study by NerdWallet, 94% of millennials use mobile payment apps compared to 87% of Gen Zers, 88% of Gen Xers, and 65% of baby boomers.

Given this trend, we had a discussion with Cathy Ceci, our Agency Audit Director and asked if these peer-to-peer payments are acceptable depository and disbursement platforms for real estate closings. Our audit program, for our FNF family of companies, tests for these applications as part of the escrow review. If found to be in use, the risks are discussed at the completion of the audit.

Here are a few important points:

  • Timeliness of transfer – most of these apps require a waiting period for funds to be available which may interfere with states requiring Good Funds
  • Instant payments cost money (Venmo currently charges1.5%)
  • Fairly low transfer thresholds
  • These types of transfers are not compatible with positive pay
  • Payment revocation is a challenge – if an agent sends the funds to the wrong account, they will more than likely not get the money back

For more specific information on an industry level, she reached out to Jason Nadeau, FNF’s Chief Digital Officer, who Chair’s ALTA’s Digital Process Workgroup, who produced the attached: Digital Funds Transfer – Best Practices for Title Agents, for your reference.

As we strive to continue to provide information in understanding potential risks to your escrow account, we encourage you to review the attached information and include it as part of your agency’s escrow account controls. Feel free to reach out to your agency rep. They are happy to address any specific questions you may have their cybersecurity and wire fraud prevention programs.