Buyer's Choice of Escrow...What are your thoughts?
Galgiani's Bill (AB 957) "The Buyers Choice Act" Passes First Hurdle in Assembly Banking and Finance Committee AB 957 will ensure that homebuyers can use local escrow services to provide better service at lesser cost in the purchase of Bank Owned houses. SACRAMENTO – Assemblymember Cathleen Galgiani (D- Livingston) guided “The Buyers Choice Act” through the Assembly Banking and Finance committee on Monday by a near unanimous vote of 8 to 1. AB 957 would mandate that buyers of bank-owned properties (foreclosed homes) would have the choice of using a local escrow office to handle the transaction. “Local escrow companies, which can offer the best resources and service in the current housing crisis, are being shut out of the Bank Owned (foreclosed) housing market”, according to Galgiani. “Instead of local businesses assisting homeowners and expediting the transfer of foreclosed properties to purchasers, they're literally locked out of the market. Excluding local businesses from competition for services also eliminates local jobs that further harms the local economy and eliminates competition.” Since the last major bout of foreclosures during the downturn of the 1990’s, a practice has developed in the foreclosure market that is having significant consequences to home buyers, their realtors and local escrow offices. Banks and other large lenders that have taken possession of foreclosed homes are increasingly requiring that buyers of those properties use escrow companies with which they have contracts regardless of who pays for the service. This practice causes local homebuyers to pay up to twice as much in escrow fees to escrow offices out of the area that provide inadequate service to the buyer. Currently, federal law called the Real Estate Settlement Procedures Act (RESPA) prohibits a seller of residential property from requiring or influencing a buyer to purchase title insurance from a company chosen by the seller. Assembly Bill 957 seeks to do the same with escrow services which are often joined with Title Insurance. Assemblymember Galgiani was alerted to the problem by Central Valley industry professionals. Atwater realtor Andy Krotik, Merced mortgage lender Rick Seymore and Tim Eagan of The Escrow Institute of California presented first hand testimony at the Banking and Finance Committee hearing in the Capitol on Monday afternoon. AB 957, “The Buyer’s Choice Act”, would prohibit a seller of residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller and would also prohibit a seller of residential property from, without good cause, disapproving the use of a title or escrow company chosen by a buyer. A seller who violates these provisions would be liable to the buyer for a civil penalty. AB 957 now heads to the Assembly Judiciary Committee.
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