The Escrow Institute of California announced that Governor Schwarzenegger signed Assembly Bill 957 into law.
This bill, authored by Assembly Member Cathleen Galgiani, protects consumers by ensuring that they have the right to choose their own real estate service providers when purchasing foreclosed properties.
AB 957, known as the Buyer's Choice Act, prohibits sellers of so-called REO properties - typically foreclosed properties owned by banks - from requiring the buyer to use a particular title company, escrow settlement or other real estate service provider. This unethical, anti-competitive practice drives up costs for homebuyers and takes business away from locally owned companies.
If you follow our Blog, you will know I have written countless posts about our escapades with bank owned title companies.
Here are just a few...
There ought to be a law! - Don't you hate it when the title company makes more than you!
Why do discount title companies hired by the bank get to charge whatever they want?
I chuckled when I found the first blog in my archive... Arnold must have been listening!
Overall I think this new law is a good thing... but the reality is I don't think it will change anything!
My biggest beef with the Bank Owned Title Companies is they give the banks a big discount on their fees... BUT they just end up passing them on to the Buyer.
Here is an example of one of our clients who got gouged by a Southern California title Company:
Escrow fee:
$891 (Wow.. that seems a little steep..Shouldn't it be more like $400?)
Title insurance:
$1674
Buyer Messenger Fee:
$35 (Did you send the Buyer a secret message I did not know about?)
Sub escrow fee:
$62(What?.. Didn't they already pay you a hefty escrow fee?)
Loan tie-in-fee:
$200 (tie into what? There is only one loan?)
Processing Fee:
$150 (You mean the escrow fee did not cover it?)
Courier Fee:
$24
Buyer Archive fee
$50 (Wow.. now you are getting creative!)
Wire Fee
$25
Archiving Fee #2
$50 (OK... now you are pushing it!)
This is from a real closing statement! When I got the estimated HUD statement before my client's signing... I had to laugh... because it is all I could do!
I have tried calling the bank owned title companies to ask them to explain these fees. Every time I have called to discuss these crazy fees, the bank owned title companies (mostly located in Southern California) pretty much tell me to stuff it (my interpretation) and tell me they don't have to explain any of their fees to me.
Not only are the bank owned title companies making their money off the Buyer's backs... they are miserable to work with! I am not kidding here... ABSOLUTLY MISERABLE!
So let me get off that soap box and back to my point!
If you have made offers on Sacramento foreclosed property lately... you know there is a lot of competition right now in certain price ranges.
The Banks control a huge percentage of our Sacramento inventory and right now they make the rules. Buyers who ask for seller's concessions or repairs get their offer filed directly to the trash... in multiple offer situations.
So if you are one of those 10 offers sitting in front of the asset manager (works with the bank to sell their foreclosure inventory) and you are giving them grief about using their title company... where do you think your offer will be filed?
It is like asking a bank to modify their standard addendum they require all Buyers to sign that takes away many of their rights and their first born child (not really)! The Banks are never gonna do it!
That is my stance as of now...
Arnold.... It is the thought that counts!
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