Business ProfileforRealty Escrow Corporation

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

April 10, 2019 The following describes an Order Revoking that has been formally brought by a government agency. Jan Lynn Owen and the Department of Business Oversight (Commissioner of Business Oversight), alleges and charges as follows:

Under the Settlement Agreement dated November 29, 2018, between Realty
Escrow Corporation and the Commissioner of Business Oversight: Roberto Melchor, Realtys owner and president, had 90 days within which to sell Realty, and the 90-day period commenced on December 1, 2018, the effective date of the Agreement. Melchor agreed to immediately surrender to the Commissioner Realtys escrow license in the event there was no sale, or good faith negotiations to sell Realty, pending at the end of the 90-day period. The 90-day period expired on February 28, 2019.

Under the Agreement the parties acknowledged that any Application filed with the Commissioner under the contemplated sale of Realty Escrow would be processed in an expeditious manner, which would include prompt notice to such applicant of any deficiency in the completeness of the Application or of any potential problems with the applicant. Melchor agreed that in the event the Commissioner abandoned or denied any Application, as provided by the Escrow Law, and the 90-day period had passed, Melchor would be required to immediately surrender Realtys escrow agent's license to the Commissioner.

Realty and Melchor further agreed that if Realtys escrow agent's license was not surrendered to the Commissioner as required under the Agreement within 15 days after written notice by the Commissioner to Realty and Melchor, the Commissioner would automatically revoke Realtys escrow agents license and Realty waived its right to a hearing regarding the license revocation and to any reconsideration, appeal, or other rights which may be afforded it under the California Escrow Law.

Realty failed to file its 2018 annual audit report, which was due by December 17, 2018, in violation of Financial Code section 17406. Realty failed to file its escrow liability report, which was due by February 15, 2019. Realty has not complied with the annual audit reporting requirements of the Escrow Law as was required under the Agreement.

Realty filed its change of ownership application with the Commissioner on February 5, 2019. The Commissioner notified Realty and Melchor on February 26, 2019, that the Application was incomplete. Realty had 15 days to supplement the incomplete application, but it failed to do so. The Commissioner formally abandoned Realtys Application on March 19, 2019. Melchor failed to immediately surrender Realtys license, once the Commissioner gave notice that she had formally abandoned the Application.

On March 20, 2019, the Commissioner gave Realty and Melchor written notice of the Commissioner's intention to revoke Realtys license under the Agreement unless they cured the defects described above by filing Realtys annual audit report, filing Realtys escrow liability report, paying the accrued penalties for the non-filed annual audit report, and surrendering Realtys escrow agents license as required under the Agreement. Realty and Melchor failed to cure the defects within the time required and the time for Melchor to surrender Realtys escrow agents license has now passed.

The Commissioner hereby revokes the escrow agents license issued to Realty. Effective this immediately.

To access the full Department of Business Oversight press release, please visit: http://www.dbo.ca.gov/ENF/pdf/2019/Realty-Escrow-Corporation-4-10-19.pdf

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

November 29, 2018 The following describes a accusation that has been formally brought by a government agency. Jan Lynn Owen, the Commissioner of Business Oversight (Commissioner), alleges and charges as follows:

On December 16, 2016, the Commissioner, through her audit staff, commenced a special regulatory examination of Realty based on a review of the company's annual audit reports for fiscal years 2014, 2015, and 2016. The Commissioner's review disclosed Realty Escrow Corporation had paid individuals significant commissions and made contract service payments representing between 42 to 70 percent of Realty's total operating expenses during those years. Through her audit staff, the Commissioner commenced a regulatory examination of Realty on March 2, 2017. The special and regulatory examinations disclosed the following violations of the Escrow Law.

Melchor paid referral fees or commissions to short sale negotiators from Realty's general account during the period 2014 to 2016. At least 15 individuals received payments from Realty drawn on the company's general account for short sale negotiation activity. The payments Realty made to short sale negotiators totaled approximately $157,653.63 in 2014; $96,775.00 in 2015; and $124,960.00 in 2016 in violation of Financial Code section 17420.

When the Department's examiner questioned Melchor about the payments Realty had made to some of the individuals, he replied that the payments were made to "Outside servicer(s) that negotiated Short Sales and (were) paid on a per file basis(.)" Melchor also told the examiner, when she questioned how Realty calculated the payments to the short sale negotiators, that they were paid either on a per file basis or a regular salary basis and that the payment amount was determined by the short sale negotiator's experience and the number of files he or she brought to the company.

Out of the 15 short sale negotiators identified by the Department's examiner to whom Realty and Melchor made payments, only three of those individuals appear to hold salesperson licenses issued by the California Department of Real Estate (DRE). Absent a few narrow exceptions and limited exemptions, under Business and Professions Code section 10131, subdivisions (a) and (d) of the Real Estate Law, only licensed real estate salespersons (under the supervision of a licensed broker), licensed brokers, or licensed attorneys may negotiate short sale transactions on behalf of consumers in California.

When questioned by the Department's examiner about the licensure status of the short sale negotiators to whom Realty paid commissions, Melchor responded "I do not know if they are licensed real estate agents or are associated with a real estate company. I do know that they were independent processors and processed short sales for different real estate companies."

On July 3, 2018, the Commissioner personally served Realty and Melchor with a notice of intention to issue order to revoke the escrow agent's license issued to Realty and to bar
Melchor from any position of employment, management, or control of any escrow agent under Financial Code section 17423, accusation, and accompanying documents dated June 29, 2018.

The Commissioner agrees that Melchor shall have 90 days within which to sell Realty, and the 90-day period shall commence on the Effective Date of this Settlement Agreement. Melchor agrees to immediately surrender to the Commissioner the escrow license of Realty in the event there is no sale, or good faith negotiations to sell Realty, pending at the end of the 90-day period.

To access the full Department of Business Oversight press release, please visit: http://www.dbo.ca.gov/ENF/pdf/2018/Realty-Escrow-Corporation-Settlement-Agreement-11-29-18.pdf