Earnest money deposits play a vital role in every real estate transaction, and recent efforts by the REALTORS® Federal Credit Union (RFCU), a division of Northwest Federal Credit Union, have resulted in a new option for brokers who are looking for the best place to deposit such funds.
Until last January, regulations did not allow credit unions to offer escrow accounts, notes Martin Edwards, director of Northwest Federal Credit Union. But legislative changes urged by the credit union now enable broker members to open escrow accounts at RFCU, giving them a viable option to house their clients’ earnest money deposits.
“These new broker escrow accounts provide an alternative to traditional banks, which nearly always impose large fees for the service,” Edwards explains. “Since more than 300,000 brokers have their broker’s licenses, this is a victory for the credit union industry, for our members, and for all members of the National Association of REALTORS® (NAR).”
The concept of adding escrow checking accounts to the credit union’s offerings arose from discussions between Edwards, a former NAR president, and David LeCraw, past president of the Georgia State Association of REALTORS®, who noted that many brokers were being required to maintain large compensating balances in their escrow accounts at traditional banks—and that the resulting fees and charges were a burdensome expense.
They recognized that offering a solution through the credit union would both expand the institution’s growing menu of services and bring value to real estate professionals across the nation.
“Challenging the status quo on behalf of our members and the entire real estate industry became a priority,” says Edwards. “Convenience matters, and we are very pleased to be leading the way in meeting the varied financial needs of brokers all under the roof of RFCU.”
The credit union’s real estate escrow accounts are free to open and have no minimum balance requirements or monthly maintenance fees—a distinct perk for brokers who want to reduce operating expenses.
In 2015, the business expenses of brokers averaged $10,500, notes Martin, while the business expenses of agents averaged $4,500. The newly available escrow accounts provide another route to a better bottom line.
NAR stands firmly behind the new incentive.
“REALTORS® Federal Credit Union is a secure and innovative financial services provider formed to serve the unique banking needs of Realtors,” says 2016 NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Fla. “Providing the option of a broker escrow account is just one more example of how RFCU is a world-class benefit for our members.”
For more information, please visit www.realtorsfcu.org.
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