My State association, the California Association of Realtors is the best! They are consistenly help their Realtors with consumer protection issues. I have always had a pet peeve in my area regarding the seller choosing the title company and (most of the time it is the listing agent) making the buyer pay for title insurance. In my area, the normal practice is for the buyer to pay for title insurance, therefore they get to choose. These agents do not know RESPA laws. I always give my buyers choices but they rely on me to make sure they get the best insurance and title officer. I have been in the business for many years and as a listing agent have had to deal with many title insurance companies that make many mistakes and my title company at no cost has had to make things right for my clients.  NOW, REO sellers (unlless they pay for the insurance) CANNOT force a buyer to use a particular title company! Below is the information I just received from CAR.

PRACTICE UPDATE: REO LENDER CANNOT REQUIRE BUYER TO PURCHASE TITLE INSURANCE FROM ANY PARTICULAR COMPANY
No seller can require that the buyer purchase title insurance from any particular title insurance company. This rule pertains to transactions involving a federally-related mortgage loan for one-to-four residential units as defined under the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. section 2608). Although this is a well-established rule under RESPA, it bears repeating given the recent upsurge in REO transactions.

REO transactions are not exempt from RESPA requirements. If an REO lender chooses the title insurance company, as is often the case, it cannot require directly or indirectly, as a condition to selling the property, that the buyer purchase the title insurance policy. An REO lender that violates this RESPA requirement can be, among other things, held liable to the buyer in the amount equal to three times all charges made for such title insurance. Moreover, anyone who believes that RESPA has been violated may file a complaint (and may request confidentiality) to the U.S. Department of Housing and Urban Development (HUD). For more information about filing a RESPA complaint, go to http://www.hud.gov/offices/hsg/sfh/res/respamor.cfm#HE2.