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.

3 comments:

elmemea said...

Legislation like AB 957 is needed in California so smaller companies can compete. This kind of bill is also important because it would prevent banks from telling me which title or escrow company I must deal with. It looks like this bill is getting watered down and I sincerely hope that does not happen.

maddonnaqueen72 said...

Hey look what came to me! Read it guys and and join the cause for this issue!!



Your immediate attention is needed. Even if you have already signed and faxed a support letter – please do it again using the revised attached letter. Please have everyone you know do it too. (1) Print the letter and sign your name, address, etc.; (2) look at the attached Senate Judiciary Committee list and fax it to the Member of that Committee in your area. Thank you!!

AB957 Keep the real estate jobs in California

Dear Real Estate Professionals:

We are writing regarding AB957, which has been strongly supported by real estate professionals across the state. AB957 provides, in part, that:

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.

Assembly Member Galgiani is the author and, of course, supporter of the bill. However, we understand that the large banks and title companies have brought in their teams of lobbyists and are now actively opposing the bill as amended.

Why are banks opposing the bill? We believe the banks are opposing the amended bill because they want to continue to exercise exclusive control, to the detriment of buyers, over the selection of all service providers. AB957, which is called the “Buyer’s Choice Act,” would provide your clients with a role in the selection process.

Why are the large title companies opposing the bill? We believe that they are opposing the amended bill because they, and their affiliated services, are getting all of the REO business from the banks. AB957 would allow independent title, escrow, and natural hazard disclosure providers to compete for the REO market.

How can you help? You can help by asking your Senator to support AB957, as currently amended. Attached is a letter of support that you can send to your Senator.

There are several reasons why California real estate professionals should support AB957:

1. As a real estate professional, it is your obligation to conduct due diligence for your client. Do not leave due diligence to the banks. The banks are concerned with their interests, not yours.

2. “Good faith” is required in the selection of a natural hazard disclosure provider. “Good faith” is not leaving the decision to the banks. If your client finds something wrong with his or her home, it is likely the broker and agent that will be sued, not the bank.

3. You want the best service for your clients. When you choose the title, escrow, and natural hazard disclosure provider, you ensure that you get that service.

4. Not all title, escrow, and natural hazard disclosure providers are the same. You want the right to select the providers so that you ensure that your clients receive the best product.

If you believe that ensuring the right of buyers to choose their service providers is important, then we urge you to support AB957, please print the letter, sign your name and fax the letter to Assembly Member Galgiani and to the Senate Member listed for your area (see below).

Click the link below to open a PDF of the letter for easier printing.
http://propertyid.com/platinum/downloadables/emailblast/AB957/AB957_Support_Letter.pdf

Click on the link below to pull up the bill itself.
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0951-1000/ab_957_bill_20090514_amended_asm_v97.pdf

Reggie said...

By virtue of this bill, buyers will now be able to choose an escrow company of their own. Without any knowledge of a transaction, they can choose their friend or relative to handle what is to be a "neutral" party to the transaction. More likely they will take a recommendation from a selling agent who may sell one or two homes a month and use the title/escrow company of "THEIR" choice. Considering the amount of business they represent in a given month how can they be relied upon to know what is best for their customer with regards to title and escrow and the seller involved with the exception of ensuring all documents are signed, and inspections are completed? I am not implying that they are incompetent, but I had to marry an escrow officer to truly understand the inner workings of what they do on a daily basis. How many agents, Seller or Listing, and especially representives of the Great State of California can say that? These sellers choose to work with certain companies for reasons that are far more important than the "what will you give me if I give you" attitude.

Someone has to make a decision on what companies will be used to facilitate a transaction, and oh, btw IT IS ALREADY IN THE CAR CONTRACT and part of the "negotiation". But, I question the foresight of the "overwhelming" support in the state legislature. The majority of title/escrow companies have deep discounts to sellers (and buyers) that service large accounts of REO business. Switching to a company of the buyer's choice eliminates the deep discount volume incentives and likely the willingness to pay for their closing costs as is so often part of a deal. Compare the published fees for a busy title/escrow company that services these large REO accounts. Their fees are half (if not more than half) than the typical Independent Escrow company which will charge buyers and sellers $2.00 - $2.50 per thousand, plus their added costs. Will they get better service? Maybe....perhaps the agents will get better service because they are using their PERSONAL rep contacts in the industry, and may benefit in other ways...but it will not inherently enhance the buyer's transaction. Did you know that escrow companies are not included in Bill SB 133? That means, escrow companies can now give BUYER"S agents PERKS for sending business their way. With all this information in mind, it will not be a BUYERS choice, but an "agent's" choice, and ultimately the buyer will pay for "their choice" in the form of higher fees, slower transaction times, and per diem penalties.....but at least someone will say "thank you" for the business while their agent gets the Laker's tickets. Secondly,in a Sept 27 record.net article http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090927/A_BIZ/909270321/-1/A_BIZ#STS=g0gsej3i.epm, Andrew Avalos said "The added benefit would be that the service and ease of these transactions would greatly improve due to the title company actually caring about the transaction and the business that they receive". Is he actually implying that people that work for the larger companies (and many other smaller companies) think they feel they are entitled to the business it generates and does not care about whether or not they do a good job for the seller? Tell that to the single woman who supports her mother full-time on an assistant salary of $3200 per month and works 60 hours a week (less than many independent companies) that she doesn't appreciate the business. The mere fact that this agent thinks that only "his" escrow officer and title reps he would "refer" to his clients will appreciate the business and will do a much better job is a clear foreshadowing as to what consumers can expect.

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