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Because there is a conflict of interest.

While title companies and escrow firms almost always have the same goal in a transaction there are instances when neutrality could be broken. How can a party to a transaction be truly independent if it is a subsidiary or department of another party to the transaction? It simply can’t.

Do these conflicts of interest matter? I think they do. Do these conflicts materialize often? I don’t think so. What is important is that escrow remains escrow and does not morph into something it is not.

Escrow is supposed to be the neutral third party that owes an equal duty to all parties involved in a  transaction. Although an escrow company is not tasked with enforcing the law, it does have a responsibility to report obvious and egregious fraud. That duty is not just to the lender but to the process itself.The housing industry may be the largest in America when you figure all the ancillary industries that depend on it from construction to furniture making.  In the home buying or refinancing process there are approximately 12 different parties to any transactions from the lender to the insurance broker. Only one of those parties is in contact with all the others and is tasked with a duty to them all. It is a great responsibility that should not, in my humble opinion, be relegated to being a side service that a title insurer offers. It should be held to a higher standard than any other party and therefore should be prohibited from being owned or controlled by any other party.

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