Want to see some confusion?
Try keeping up with all of the rules and regulations surrounding the Real Estate Settlement Procedures Act (RESPA). It's like trying to figure out the plot to"Lost." And believe me, I tried unraveling that TV series a long time ago, only to give up in frustration. I don't even think the writers know where it's going.
But I digress.
A new survey by QuestSoft, a California-based provider of mortgage compliance software and services for lenders, reveals that 74 percent of lenders think compliance issues surrounding changes to the Real Estate Settlement Procedures Act pose the greatest concern in 2009.
Specifically, they cited adjustments to fee accuracy rules in RESPA as a major concern for lending practices.
To halt kickbacks that typically boost the cost of settlement services, RESPA now requires lenders to supply complete disclosures to consumers during several stages of the transaction process. One the disclosures says the lenders have to provide borrowers with a Good Faith Estimate within three days of receiving an application.
That sounds reasonable. But now H.R. 1728 is muddying the waters. Approved by the House and recently sent to the Senate Committee on Banking, Housing, and Urban Affairs, this measure would supercede the current RESPA changes and force a rewrite to better complement the Federal Reserve’s Truth in Lending Act.
No wonder lenders are so confused!
I spoke recently to QuestSoft President Leonard Ryan and he said all of these new rules -and the potential overhaul that might occur with existing mandates - makes for a pretty confusing mess.
"The whole entire process of disclosure is inherently confusing to people," Ryan said. "All kinds of different paper gets dumped on consumers and they have a tendency to be overwhelmed by it. It's almost like a homeowners association sending you their CC&Rs."
Ryan said they ought to combine of all of those compliance mandates into one document that lenders and everyone else could understand.
"If you could put the Truth in Lending, the Good Faith Estimate and all of the other disclosures together it would make a lot more sense," he said. "But then you still have states going into what's right or what's wrong, and before long you get a tall stack of paper."
All of these issues certainly add to the confusion. But in California, things get doubly confusing because the Natural Hazard Disclosure Statement - the report that lets you know if the home you're buying is in an earthquake zone, high-fire area or is subject to other concerns - isn't even listed on HUD1, a document provided by the U.S. Department of Housing and Urban Development.
A legal action last year determined that NHDs in California are a settlement service as part of the escrow process and are subject to RESPA. But they're not listed, despite that the fact that scores of other settlement sevices are, including the loan origination fee, loan discount fee, appraisal fee, credit report, lender's inspection fee and the mortgage insurance application fee.
HUD isn't enforcing NHDs because the agency isn't making lenders, title companies, realty firms and buyers aware that Natural Hazard Disclosure Statements are required.
Lenders, Ryan said, need "easy-to-use programs and tools" to keep up with and comply with constantly changing regulations. I agree. And in California, they could start by making sure that everyone knows about NHDs.
So the next time you try to decipher the plot to "Lost" just remember - it's probably not as complicated or confusing as RESPA and HUD's enforcement of RESPA issues!
Saturday, June 13, 2009
Wednesday, June 3, 2009
A good bill is rapidly eroding
Ever noticed how good ideas often get watered down to the point where they're no longer good ideas?
That's exactly what's happening with Assembly Bill 957, the "Buyers Choice Act," authored by Assemblywoman Cathleen Galgiani. The measure – which is still winding its way through the legislative process – was initially intended to allow buyers of bank-owned properties to use their own title and escrow companies, as opposed to banks dictating those choices for them.
That would have been good on two fronts: First, it would have benefited homebuyers, who often end up paying twice as much in escrow fees to big, out-of-town escrow companies who provide lousy service.
Secondly, it would have leveled the playing field by helping local title and escrow companies compete for business in the REO market. These smaller companies better understand the special needs associated with their specific areas. But they've been pushed out of the running because they can't compete with the iron-clad arrangements these BIG banks have with BIG title companies – arrangements that are forged through discounts and unfair business alliances.
They're monopolizing a big part of the market. Currently, 60 percent of the residential transactions that take place in California involve bank-owned properties. As a result, many of the smaller companies are going out of businesses.
It doesn't take a rocket scientist to see that this bill would be a good thing.
But it's already under attack, and the California Association of Realtors was among the first to weigh in. CAR wants to amend the measure because "it would have given too much control to one side of the transaction over the other." Well, correct me if I'm wrong, but isn't that exactly what's going on now? If big banks and big title companies have airtight agreements that completely keep smaller, independent companies from getting any of the REO business ... well, I'd say that's about as one-sided as it gets.
And think about this: 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.
AB 957 is also opposed by two of the largest title companies. It's certainly easy to see why they're against it. After all, who'd want a little healthy competition when you can have the whole pie? These parties that oppose AB 957 have threatened to gain enough votes to kill it in order to serve their own interests. And that's exactly what might happen if we don't speak up.
The proposed amended language is as follows:
1103.21. (a) A seller shall not, directly or indirectly, as a condition of receiving offers or selling residential real property to a buyer, require the buyer to purchase title insurance, or escrow services, or a Natural Hazard Disclosure Statement in connection with the sale of that property from a company chosen by the seller.
So to Assemblywoman Galgiani I say this: Show some initiative and preserve the thrust of your bill – consumer protection. That's why you wrote it in the first place, isn't it?
Let's make this a true consumer-protection bill. Anything less would be a waste of time.
The bill is slated to go next to the Senate Banking and Finance Committee and the Senate Judiciary Committee. Following is a list of committee members names, districts, fax numbers and a suggested letter of support.
If you support the proposed amendment to this bill print the letter, sign your name and fax it to Assembly Member Galgiani and to the Senate member listed for your area:
Dear Assembly Member,
I am writing to express my support for AB 957 with the following proposed language included:
1103.21. (a) A seller shall not, directly or indirectly, as a condition of receiving offers or selling residential real property to a buyer, require the buyer to purchase title insurance, or escrow services, or a Natural Hazard Disclosure Statement in connection with the sale of that property from a company chosen by the seller.
I'm very afraid that the power of AB 957 is being severely threatened.
Wasn't this bill designed to stop organized banks and large title companies from monopolizing REO business through friendly kickbacks they give each other? Unless the bill is amended to include Natural Hazard Disclosures (NHD) and all settlement services, the controlled “affiliated” companies owned by the large title companies will control California's real estate business.
This new language has been proposed to include specific settlement services in AB 957. Your support of this amendment will ensure that large banks and large title companies cannot impose their own provider, and ensures that the provider is negotiable.
Please represent me in supporting this amendment.
Sincerely,
____________________________
(Signature)
____________________________
(Printed Name)
____________________________
(Street Address, City, State, Zip)
____________________________
(Phone Number)
Assembly Member Cathleen Galgiani, FAX 916-319-2117
Click on the link below for AB 957:
http://www.aroundthecapitol.com/Bills/AB_957/
Senate Judiciary Committee
Senator Ellen Corbett- Chair (D) State Capitol, Room 5108, Sacramento, CA, 95814. Fax: 916-327-2433. Counties: Portions of Alameda, portions of Santa Clara. Main Cities: Castro Valley, Fremont, Hayward, Milpitas, Newark, Pleasanton, San Jose, San Leandro, San Lorenzo, Union City.
Senator Tom Harman (R) State Capitol, Room 3070, Sacramento, CA, 95814. Fax: 916-445-9263. Counties: Portions of Orange. Main Cities: Costa Mesa, Cypress, Fountain Valley, Garden Grove, Huntington Beach, Irvine, Newport Beach, Westminster.
Senator Dean Florez (D) State Capitol, Room 313, Sacramento, CA, 95814. Fax: 916-327-5989. Counties: Portions of Fresno, portions of Kern, Kings, portions of Tulare. Main Cities: Bakersfield, Coalinga, Delano, Dinuba, Fresno, Hanford, Lemoore.
Senator Mark Leno (D) State Capitol, Room 4061, Sacramento, CA, 95814. Fax: 916-445-4722. Counties: Portions of Marin, portions of San Francisco, portions of Sonoma. Main Cities: San Francisco, Mill Valley, Novato, Petaluma, Rohnert Park, San Rafael.
Senator Mimi Walters (R)State Capitol, Room 3082, Sacramento, CA, 95814. Fax: 916-445-9754. Counties: Portions of Orange. Main Cities: Orange, portions of Fullerton, Laguna Niguel, Laguna Hills, Portions of Anaheim, Mission Viejo, Lake Forest, Tustin, Aliso Viejo, Rancho Santa Margarita, Irvine, Laguna Woods, Buena Park.
Senate Banking and Finance Committee
Senator Ron Calderon - Chair (D) State Capitol, Room 5066, Sacramento, CA, 95814. Fax: 916-327-8755. Counties: Portions of Los Angeles. Main Cities: Hacienda Heights, Huntington Park, La Mirada, Los Angeles, Montebello, Norwalk, Pico Rivera, Santa Fe Springs, South El Monte, South Gate, Whittier.
Senator Dave Cogdill - Vice Chair (R) State Capitol, Room 5097, Sacramento, CA, 95814. Fax: 916-327-3523. Counties: Portions of Fresno, portions of Madera, Mariposa, portions of San Joaquin, portions of Stanislaus, Tuolumne. Main Cities: Clovis, Fresno, Lodi, Madera, Stockton, Sonora.
Senator Lou Correa (D) State Capitol, Room 5052, Sacramento, CA, 95814. Fax: 916-323-2323. Counties: Portions of Orange. Main Cities: Anaheim, Buena Park, Fullerton, Garden Grove, Santa Ana, Stanton, Westminster.
Senator Dave Cox (R) State Capitol, Room 2068, Sacramento, CA, 95814. Fax: 916-324-2680. Counties: Alpine, Amador, Calaveras, El Dorado, Lassen, Modoc, Mono, portions of Nevada, portions of Placer, Plumas, Portions of Sacramento, Sierra. Main Cities: Auburn, Elk Grove, Fair Oaks, Folsom, Galt, Mammoth Lakes, Orangevale, Placerville, Rancho Cordova, Roseville, Sacramento, Shingle Springs, South Lake Tahoe, Susanville, Truckee, Valley Springs.
Senator Dean Florez (D) State Capitol, Room 313, Sacramento, CA, 95814. Fax: 916-327-5989. Counties: Portions of Fresno, portions of Kern, Kings, portions of Tulare. Main Cities: Bakersfield, Coalinga, Delano, Dinuba, Fresno, Hanford, Lemoore.
Senator Tom Harman (R) State Capitol, Room 3070, Sacramento, CA, 95814. Fax: 916-445-926. Counties: Portions of Orange. Main Cities: Costa Mesa, Cypress, Fountain Valley, Garden Grove, Huntington Beach, Irvine, Newport Beach, Westminster.
Senator Christine Kehoe (D) State Capitol, Room 5050, Sacramento, CA 95814. Fax: 916-327-2188. Counties: Portions of San DiegoMain Cities: San Diego, Del Mar, Lemon Grove.
Senator Carol Liu (D)State Capitol, Room 5061Sacramento, CA, 95814. Fax: 916-324-7543. Counties: Portions of Los Angeles. Main Cities: Altadena, Burbank, Glendale, Hollywood, La Canada Flintridge, Los Angeles, Pasadena, San Gabriel, Valley Village, Van Nuys.
Senator Alan Lowenthal (D) State Capitol, Room 2032, Sacramento, CA, 95814. Fax: 916-327-9113. Counties: Portions of Los Angeles. Main Cities: Artesia, Avalon, Bellflower, Cerritos, Downey, Hawaiian Gardens, Lakewood, Long Beach, Lynwood, Paramount, Signal Hill, Southgate, Florence-Graham, Willowbrook.
Senator Alex Padilla (D) State Capitol, Room 4038, Sacramento, CA, 95814. Fax: 916-324-6645. Counties: Portions of Los Angeles. Main Cities: Canoga Park, North Hills, North Hollywood, Northridge, Pacoima, San Fernando, Sun Valley, Sylmar, Van Nuys, Winnetka.
Senator George Runner (R) State Capitol, Room 4090, Sacramento, CA, 95814. Fax: 916-445-4662. Counties: Portions of Kern, portions of Los Angeles, portions of San Bernardino, portions of Ventura. Main Cities: Lancaster, Palmdale, Santa Clarita, Apple Valley, Hesperia, Victorville, Fillmore, Santa Paula, Los Angeles.
Senator Lois Wolk (D) State Capitol, Room 4032, Sacramento, CA, 95814. Fax: 916-323-2304. Counties: Portions of Sacramento, portions of San Joaquin, portions of Solano, Yolo. Main Cities: Davis, Fairfield, Manteca, Stockton, Tracy, Vacaville, West Sacramento.
That's exactly what's happening with Assembly Bill 957, the "Buyers Choice Act," authored by Assemblywoman Cathleen Galgiani. The measure – which is still winding its way through the legislative process – was initially intended to allow buyers of bank-owned properties to use their own title and escrow companies, as opposed to banks dictating those choices for them.
That would have been good on two fronts: First, it would have benefited homebuyers, who often end up paying twice as much in escrow fees to big, out-of-town escrow companies who provide lousy service.
Secondly, it would have leveled the playing field by helping local title and escrow companies compete for business in the REO market. These smaller companies better understand the special needs associated with their specific areas. But they've been pushed out of the running because they can't compete with the iron-clad arrangements these BIG banks have with BIG title companies – arrangements that are forged through discounts and unfair business alliances.
They're monopolizing a big part of the market. Currently, 60 percent of the residential transactions that take place in California involve bank-owned properties. As a result, many of the smaller companies are going out of businesses.
It doesn't take a rocket scientist to see that this bill would be a good thing.
But it's already under attack, and the California Association of Realtors was among the first to weigh in. CAR wants to amend the measure because "it would have given too much control to one side of the transaction over the other." Well, correct me if I'm wrong, but isn't that exactly what's going on now? If big banks and big title companies have airtight agreements that completely keep smaller, independent companies from getting any of the REO business ... well, I'd say that's about as one-sided as it gets.
And think about this: 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.
AB 957 is also opposed by two of the largest title companies. It's certainly easy to see why they're against it. After all, who'd want a little healthy competition when you can have the whole pie? These parties that oppose AB 957 have threatened to gain enough votes to kill it in order to serve their own interests. And that's exactly what might happen if we don't speak up.
The proposed amended language is as follows:
1103.21. (a) A seller shall not, directly or indirectly, as a condition of receiving offers or selling residential real property to a buyer, require the buyer to purchase title insurance, or escrow services, or a Natural Hazard Disclosure Statement in connection with the sale of that property from a company chosen by the seller.
So to Assemblywoman Galgiani I say this: Show some initiative and preserve the thrust of your bill – consumer protection. That's why you wrote it in the first place, isn't it?
Let's make this a true consumer-protection bill. Anything less would be a waste of time.
The bill is slated to go next to the Senate Banking and Finance Committee and the Senate Judiciary Committee. Following is a list of committee members names, districts, fax numbers and a suggested letter of support.
If you support the proposed amendment to this bill print the letter, sign your name and fax it to Assembly Member Galgiani and to the Senate member listed for your area:
Dear Assembly Member,
I am writing to express my support for AB 957 with the following proposed language included:
1103.21. (a) A seller shall not, directly or indirectly, as a condition of receiving offers or selling residential real property to a buyer, require the buyer to purchase title insurance, or escrow services, or a Natural Hazard Disclosure Statement in connection with the sale of that property from a company chosen by the seller.
I'm very afraid that the power of AB 957 is being severely threatened.
Wasn't this bill designed to stop organized banks and large title companies from monopolizing REO business through friendly kickbacks they give each other? Unless the bill is amended to include Natural Hazard Disclosures (NHD) and all settlement services, the controlled “affiliated” companies owned by the large title companies will control California's real estate business.
This new language has been proposed to include specific settlement services in AB 957. Your support of this amendment will ensure that large banks and large title companies cannot impose their own provider, and ensures that the provider is negotiable.
Please represent me in supporting this amendment.
Sincerely,
____________________________
(Signature)
____________________________
(Printed Name)
____________________________
(Street Address, City, State, Zip)
____________________________
(Phone Number)
Assembly Member Cathleen Galgiani, FAX 916-319-2117
Click on the link below for AB 957:
http://www.aroundthecapitol.com/Bills/AB_957/
Senate Judiciary Committee
Senator Ellen Corbett- Chair (D) State Capitol, Room 5108, Sacramento, CA, 95814. Fax: 916-327-2433. Counties: Portions of Alameda, portions of Santa Clara. Main Cities: Castro Valley, Fremont, Hayward, Milpitas, Newark, Pleasanton, San Jose, San Leandro, San Lorenzo, Union City.
Senator Tom Harman (R) State Capitol, Room 3070, Sacramento, CA, 95814. Fax: 916-445-9263. Counties: Portions of Orange. Main Cities: Costa Mesa, Cypress, Fountain Valley, Garden Grove, Huntington Beach, Irvine, Newport Beach, Westminster.
Senator Dean Florez (D) State Capitol, Room 313, Sacramento, CA, 95814. Fax: 916-327-5989. Counties: Portions of Fresno, portions of Kern, Kings, portions of Tulare. Main Cities: Bakersfield, Coalinga, Delano, Dinuba, Fresno, Hanford, Lemoore.
Senator Mark Leno (D) State Capitol, Room 4061, Sacramento, CA, 95814. Fax: 916-445-4722. Counties: Portions of Marin, portions of San Francisco, portions of Sonoma. Main Cities: San Francisco, Mill Valley, Novato, Petaluma, Rohnert Park, San Rafael.
Senator Mimi Walters (R)State Capitol, Room 3082, Sacramento, CA, 95814. Fax: 916-445-9754. Counties: Portions of Orange. Main Cities: Orange, portions of Fullerton, Laguna Niguel, Laguna Hills, Portions of Anaheim, Mission Viejo, Lake Forest, Tustin, Aliso Viejo, Rancho Santa Margarita, Irvine, Laguna Woods, Buena Park.
Senate Banking and Finance Committee
Senator Ron Calderon - Chair (D) State Capitol, Room 5066, Sacramento, CA, 95814. Fax: 916-327-8755. Counties: Portions of Los Angeles. Main Cities: Hacienda Heights, Huntington Park, La Mirada, Los Angeles, Montebello, Norwalk, Pico Rivera, Santa Fe Springs, South El Monte, South Gate, Whittier.
Senator Dave Cogdill - Vice Chair (R) State Capitol, Room 5097, Sacramento, CA, 95814. Fax: 916-327-3523. Counties: Portions of Fresno, portions of Madera, Mariposa, portions of San Joaquin, portions of Stanislaus, Tuolumne. Main Cities: Clovis, Fresno, Lodi, Madera, Stockton, Sonora.
Senator Lou Correa (D) State Capitol, Room 5052, Sacramento, CA, 95814. Fax: 916-323-2323. Counties: Portions of Orange. Main Cities: Anaheim, Buena Park, Fullerton, Garden Grove, Santa Ana, Stanton, Westminster.
Senator Dave Cox (R) State Capitol, Room 2068, Sacramento, CA, 95814. Fax: 916-324-2680. Counties: Alpine, Amador, Calaveras, El Dorado, Lassen, Modoc, Mono, portions of Nevada, portions of Placer, Plumas, Portions of Sacramento, Sierra. Main Cities: Auburn, Elk Grove, Fair Oaks, Folsom, Galt, Mammoth Lakes, Orangevale, Placerville, Rancho Cordova, Roseville, Sacramento, Shingle Springs, South Lake Tahoe, Susanville, Truckee, Valley Springs.
Senator Dean Florez (D) State Capitol, Room 313, Sacramento, CA, 95814. Fax: 916-327-5989. Counties: Portions of Fresno, portions of Kern, Kings, portions of Tulare. Main Cities: Bakersfield, Coalinga, Delano, Dinuba, Fresno, Hanford, Lemoore.
Senator Tom Harman (R) State Capitol, Room 3070, Sacramento, CA, 95814. Fax: 916-445-926. Counties: Portions of Orange. Main Cities: Costa Mesa, Cypress, Fountain Valley, Garden Grove, Huntington Beach, Irvine, Newport Beach, Westminster.
Senator Christine Kehoe (D) State Capitol, Room 5050, Sacramento, CA 95814. Fax: 916-327-2188. Counties: Portions of San DiegoMain Cities: San Diego, Del Mar, Lemon Grove.
Senator Carol Liu (D)State Capitol, Room 5061Sacramento, CA, 95814. Fax: 916-324-7543. Counties: Portions of Los Angeles. Main Cities: Altadena, Burbank, Glendale, Hollywood, La Canada Flintridge, Los Angeles, Pasadena, San Gabriel, Valley Village, Van Nuys.
Senator Alan Lowenthal (D) State Capitol, Room 2032, Sacramento, CA, 95814. Fax: 916-327-9113. Counties: Portions of Los Angeles. Main Cities: Artesia, Avalon, Bellflower, Cerritos, Downey, Hawaiian Gardens, Lakewood, Long Beach, Lynwood, Paramount, Signal Hill, Southgate, Florence-Graham, Willowbrook.
Senator Alex Padilla (D) State Capitol, Room 4038, Sacramento, CA, 95814. Fax: 916-324-6645. Counties: Portions of Los Angeles. Main Cities: Canoga Park, North Hills, North Hollywood, Northridge, Pacoima, San Fernando, Sun Valley, Sylmar, Van Nuys, Winnetka.
Senator George Runner (R) State Capitol, Room 4090, Sacramento, CA, 95814. Fax: 916-445-4662. Counties: Portions of Kern, portions of Los Angeles, portions of San Bernardino, portions of Ventura. Main Cities: Lancaster, Palmdale, Santa Clarita, Apple Valley, Hesperia, Victorville, Fillmore, Santa Paula, Los Angeles.
Senator Lois Wolk (D) State Capitol, Room 4032, Sacramento, CA, 95814. Fax: 916-323-2304. Counties: Portions of Sacramento, portions of San Joaquin, portions of Solano, Yolo. Main Cities: Davis, Fairfield, Manteca, Stockton, Tracy, Vacaville, West Sacramento.
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