Posting for

Tuesday, June 23, 1998

by: Bert Rush

brush@firstam.com

ESCROW/CLOSING/GOOD FUNDS/PAYOFFS

Probably not much to learn from this, but it's a story that cries to be told.

After being foreclosed out of his Valparaiso, Indiana home, Charles Giannetto contracted to buy the house back from his foreclosing lender for about $122,000. A title order was opened with advice that Giannetto would be getting a purchase money loan from a New Jersey lender.

When the new loan failed to materialize, the closing officer was told that instead of loan funds she should expect a wire transfer of $150,000 representing money owed Giannetto from another source. A paper closing was held on 5/30/97, with Giannetto instructing $121,884 would be paid for the house and $14,950 would be paid to clear several judgments and liens.

On Wednesday, June 18, 1997, our receptionist took a message that a wire transfer of $150 had come in. When other closers in the office said they weren't expecting a $150 wire, the closer for the Giannetto transaction assumed the message was in error--that it should've been $150,000--so she proceeded to fund the Giannetto purchase. After all other disbursements, $18,409 was paid to Giannetto.

It turned out the $150 wire was for recording fees on a different transaction ("Now you tell me!"). Giannetto's $150,000 never came in.

First American has paid $150,000 to reimburse its trust account, and is looking to Giannetto for repayment. Unfortunately, after we disbursed Giannetto refinanced and there's now a new $65,000 mortgage against the property. Anyone remember the words to "Back Home in Indiana?"