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San Dieg Real Estate - California Purchasers of Bank Owned Properties WIN New Rights

California REO Buyers can now select their own title and escrow services in as provided by California Assembly Bill 957 signed into law today by Governor Schwarzenegger.

Effective last Sunday, October 11, 2009, the Buyer's Choice Act prohibits any REO lender that is selling a residential property of up to four units, from requiring the REO purchaser to purchase escrow services or title insurance from companies that they have previously made arrangements with.

I think this bill will go a long way in providing that REO services will be better distributed to locations that better serve the Buyers and will allow them to shop around for the price and quality of those services. Local agents can expect to have escrows and title services from people and companies that they are already acquainted with as well. Now maybe they could pass a law that re-instates some of the Buyer's right's that are stripped away in the lender's re-write of the Buyer's offer that a Buyer either has to accept or just walk away.

A buyer now will have the option to select their own service providers but still may elect to select those service choices from the REO lender . Many lenders have often negotiated lower prices with their choice of service providers often based on sheer volume and REO purchasers now have the option to chose .

The biggest benefit on the enforcement side is that if an REO lender violates this law, they can be held liable for three times the charges the buyer incurs, whereas a violation by the seller's agent now may be subject to license disciplinary action.

This law does however have an expiration to it. That being January 1, 2015. I think our legislatures are telling us that the flurry of REO activity will be over by that time. For some of us, that is hopeful news. For others, not so much.

Posted by San Diego Real Estate Voice authored by William Johnson on 10/16/2009 02:50 PM

Comments (18)

San Dieg Real Estate - California Purchasers of Bank Owned Properties WIN New Rights in the Regional (Localism) Channel

new california law, assembly bill 957, buyers choice act, san diego real estate, the voice of san diego real estate

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18 Comments on San Dieg Real Estate - California Purchasers of Bank Owned Properties WIN New Rights

OCT

Wow!

The Peoples Republic of California solves another problem. Wouldn't it be nice if they did as much due diligence with regard to their over spending!

If I'm under whelmed it's because the banks have to deal with hundreds of properties buyers only one. If the buyer and seller can't agree on an escrow company nothing forces them to buy or sell the property.

Bill

H Bill, I hear ya!. But at the same time, the banks get to clear a bad asset off their books. I know I should feel sorry for them. I know how bad they have it. There must be something worng with me that I am so insensitve to all their problems, :-) It is always a wonderful day when you drop over Bill and hope that my bit of levity also finds you well and happy.

William - I'm pleased that this passed and is now in effect. One has to wonder how well the REO lenders will cooperate with an escrow company they did not select. It is difficult enough in some transactions when they have made the choice. That must be the pessimist in me.

Jeff

William - This is certainly an issue that is more than worthy of being addressed. However, I wonder if the REO sellers will simply counter back on any offers they receive, and name the title and escrow company they desire. If the buyer wants the property, they will likely need to accept the REO seller's terms.

At the end of the day when reality gets into mischief, I wouldn't be surprised if REO sellers continue to have their way with buyers. The new legislation is a nice attempt to remedy the situation however.

Hi Jeff, I hear ya. It's that old adage, Careful what you ask for, you might get it. I think there are so many issues that need to be considered around the REO but this one seemed like a good idea to me. I guess we will know better how it manifests itself as time passes.

Hi Myrl, That is is an easy one. The new law states that if the REO company or the agent for them DIRECTLY or INDIRECTLY tries to influence the service providers on the Buyer.....then the law kicks in. I would take that to be quite clear. Go to the link I provied and take a look at the bill overview that was signed into law.

Hey William,

Thanks for the info, it was the topic of discussion a few days ago in our office. Sorry to say, I doubt it's really going to change anything, because in reality selection of services has been a RESPA issue for years which has gone completely ignored. Guess like many things, time will tell.

As for Bill's comment, ouch...

William...I'm sure we all get the (several) standard addendums. All I've ever done is cross off the REO "designated" company and put in whomever my Buyers prefer. I've never had one disputed?

(haven't had a lot either) but what I have done hasn't been disputed...

Hi Lynda, you may be right but it gives the legal community something to do.

Hi Joan, I haven't done that many either but I hadn't tried your solution. But now we have something that at least makes the issue more clear on paper,:-).

Hi William - It's good that they codified this, but if a bank wants to use a title company and your offer specifies a different one, nothing will preclude them from accepting a different offer (assuming there are multiple offers, which there usually are).

Hi Susan. I can see that you are right about that but this time I would guess that someone could and most likely will test it. Some people that obviously lobbied to get this bill passed must have had something in mind? Do banks have risk management departments?

OCT

William, we can do this in Chicago but if the fees are higher, then the buyer has to pay the difference.

Hi Barb, That's interesting. I will need to back into our Bill and read it again and see if it has that caveat contained within somewhere. Thanks for sharing your information so I can check ours. It has been my experience that I would much rather have our local escrows handling the transaction as there is familiarity with them and I think better communication levels. All I could ever do as I recall, was to leave messages as the companies associated with the banks just simply have to much volume to consider anwering the phone.

OCT

It will be interesting to see how this play out. Usually, I have seen this sort of thing with relocation companies... I always wondered if it was a conflct of interest.

Hi Joan, In my mind it is a conflict of interest but foreclosures are were a rare breed and it was more of the " He who has the gold makes the rules" and clearly banks have it and we don't. It will be interesting to see how that maneuver around this and I am sure they will, perhaps by stating that they will not pay any services. Buyer chooses and Buyer pays, or they could say they will have a fixed contribution to the services ( basically the same the thing)

OCT

William, this is potentially good news for San Diego and other California buyers, but as you say, the banks will probably try to figure out a way around it. Just like builders don't pay any closing costs unless you use their lender and title co. Wait and see...

Hi Sharon,

What I think is missing today in most business is a willingness to make all business environments better instead of all the cleaver ways around things. If we all followed the spirit of the law as a well as the letter of it, what a wonderful day ( and world) it would be. In real estate , most of us actually try to do that.

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