When it comes to reconciling your escrow accounts, there's a lot to keep track of, including where your funds are coming from. Knowing the difference between guaranty and non-guaranty funds can help ensure that your funds are showing up correctly in your reconciliation reports. So, let's start with the basics:

Guaranty: funds that are not your money, typically coming from the lender or the buyer. These funds are guaranteed to be disbursed as part of the settlement provider's fiduciary responsibility to close the real estate transaction. An example of guaranty funds are funds collected at closing to pay off any prior mortgages on a property. 

Non-guaranty: funds that are your money, typically coming out of Operating Accounts or Revenue. These funds are not held for the performance of an action required in order to close. An example of non-guaranty funds are funds deposited in order to cover bank fees due by the account owner. 

All files in SoftPro are Guaranty files by default. However, individual ledgers need to have the funding type indicated manually. This designation can be made via a drop-down menu at the top of the ledger called "3-way recon. type." 

It is up to your discretion whether you prefer to label your ledgers as Guaranty or Non-Guaranty. Choosing Guaranty means that you'll be using funds that are in escrow to cover fees and other costs in the ledger. Non-Guaranty funds are tracked in the Bank Adjustments report, which lists all deposits, checks, miscellaneous debits, and funds transfer transactions appearing on Non-Guaranty ledgers. If you don't want to see a total on the Bank Adjustments report, all ledgers on that report must be changed to Guaranty.

Utilizing a third-party reconciliation service can help you keep your funds in order and ensure your reconciliation reports are accurate. SoftPro's daily or monthly reconciliation services provide peace of mind and ensure that your escrow trust account is balanced and secure, while protecting the account against fraudulent transactions.

With SoftPro's reconciliation service, you get: 

• Reconciliation of your escrow trust account each month, including a three-way reconciliation, reconciling bank statement, book balance and trial balance
• A trial balance report for your escrow trust account, listing all open escrow balances each month
• A list of all outstanding checks and disbursements
• A list of all cleared bank transactions
• Daily reconciliation of receipts and disbursements reporting on any exception items
• A segregation of duties for the processes of escrow trust accounting
• Positive Pay with reporting to the bank at regular intervals throughout the day
  

If you're ready to take your reconciliations to the next level, request a free reconciliation services quote today! 

Visit our blog to read more helpful posts about escrow account reconciliation: