I have just learned about a very serious legal breach and threat to our California real estate industry. After you’ve read this, tell me and tell our government what you think!
Did you know that Freddie Mac now refuses to sell an REO property to any buyer in California unless that buyer only accepts a First American Title-produced Natural Hazards Disclosure report? No one else’s NHD report will be permitted. Can you believe that?
Tell President Obama and Governor Schwarzenegger to NOT let Freddie Mac shut down an entire industry!
Here’s the scoop - Freddie Mac and First American Natural Hazard Disclosures (FANHD) have made an exclusive agreement cutting out every other NHD company (Can you say anti-trust?) for all Freddie Mac California real estate-owned (REO) properties. Under this exclusive arrangement, Freddie Mac requires all buyers of REO properties to agree to the sole use of FANHD natural hazard disclosure (NHD) reports.
This deal was done, I believe, without even the public posting of a public request for proposal –- a standard by every government agency.
Why should you care? In California the ONLY protection an REO buyer has is the NHD –- no other disclosure is offered. And who certified First American Title’s report as the best NHD money can buy? Nobody, that’s who.
It’s time to raise your voice and question this highly questionable and all too insider friendly relationship!
And don’t just tell the folks at Freddie Mac and First American Title’s FANHD you don’t like insider double dealing – tell our elected officials and their staffs in Sacramento and Washington DC to do what is right -- to stop these “privileged” arrangements, to support “timely” competition and the way of America life before it is taken away from all of us.
The quest is not only to create jobs, but also to preserve them!
cc. Secretary of HUD
FHFA
GAO
Governor Arnold Schwarzenegger
Senator Feinstein
Senator Boxer
President Obama
Monday, July 27, 2009
Monday, July 6, 2009
White-labeling alive and well?
It seems that the practice of "white labeling" may still be alive and well at one Southland realty firm.
White labeling, for those of you who don't know, is when a title company wholesales its Natural Hazard Disclosure (NHD) reports or data at a discount to real estate brokerage firms. Then the brokerage firms slap their own name on the reports, often selling them at an inflated price to unsuspecting consumers.
The practice is both unethical in direct violation of the Real Estate Settlment Procedures Act, or RESPA. RESPA prohibits a brokerage firm from charging consumers a fee when the brokerage does not perform any actual services for that fee.
I touched on this subject a few weeks ago with Dave Coy, managing broker for Century 21 Lois Lauer Realty in Redlands.
"We don't produce our own reports anymore," Coy said. "We used to have a private-label arrangement, but now our agents use various companies, including Property ID, and I think Fidelity has a report that they produce."
Coy said Century 21 Lois Lauer used to use First American, but stopped because First American no longer produces private-label NHD reports for Lois Lauer.
I queried Lois Lauer agent Freda England about that this week, however, and the conversation went like this:
"Does your agency have its own Natural Hazard Disclosure reports?" I asked.
"Yes, we have our own," she said. "We use the one primarily, but if it's negotiated between a buyer and seller to use another company ... they can use another one."
Well, correct me if I'm wrong, but it sounds like Century 21 Lois Lauer is still affiliated primarily with one NHD provider. And I get the sense that the company's agents are strongly encouraged to defer to that provider.
Moreover, the services listed on the Century 21 Lois Lauer website includes "Century 21 Lois Lauer Realty Hazard Reports." Sounds like private-label to me.
I ran all of this by Coy again this week and he still maintains that his agency no longer has a private-label arangement for NHD reports. The practice, he said, had become a headache for all involved.
"First American was constantly being challenged for RESPA compliance, so they finally decided they were spending too much and it wasn't worth it," he said.
A big argument against the practice of white labeling is that consumers don't know where the reports are coming from - or if they're accurate and thorough, for that matter.
And there are issues of liability. If the brokerage is not the company that actually prepared the report, does the brokerage take legal responsibility for the report if it's incorrect? Does the errors and omissions insurance of the brokerage cover the consumer who received an incorrect report?
These are questions I hope Lois Lauer Realty customers never have to ask.
This is my last planned blog article for Century 21 Lois Lauer white labeling. However, if anyone has something more to add, please contact me. I will be happy to keep your name confidential.
White labeling, for those of you who don't know, is when a title company wholesales its Natural Hazard Disclosure (NHD) reports or data at a discount to real estate brokerage firms. Then the brokerage firms slap their own name on the reports, often selling them at an inflated price to unsuspecting consumers.
The practice is both unethical in direct violation of the Real Estate Settlment Procedures Act, or RESPA. RESPA prohibits a brokerage firm from charging consumers a fee when the brokerage does not perform any actual services for that fee.
I touched on this subject a few weeks ago with Dave Coy, managing broker for Century 21 Lois Lauer Realty in Redlands.
"We don't produce our own reports anymore," Coy said. "We used to have a private-label arrangement, but now our agents use various companies, including Property ID, and I think Fidelity has a report that they produce."
Coy said Century 21 Lois Lauer used to use First American, but stopped because First American no longer produces private-label NHD reports for Lois Lauer.
I queried Lois Lauer agent Freda England about that this week, however, and the conversation went like this:
"Does your agency have its own Natural Hazard Disclosure reports?" I asked.
"Yes, we have our own," she said. "We use the one primarily, but if it's negotiated between a buyer and seller to use another company ... they can use another one."
Well, correct me if I'm wrong, but it sounds like Century 21 Lois Lauer is still affiliated primarily with one NHD provider. And I get the sense that the company's agents are strongly encouraged to defer to that provider.
Moreover, the services listed on the Century 21 Lois Lauer website includes "Century 21 Lois Lauer Realty Hazard Reports." Sounds like private-label to me.
I ran all of this by Coy again this week and he still maintains that his agency no longer has a private-label arangement for NHD reports. The practice, he said, had become a headache for all involved.
"First American was constantly being challenged for RESPA compliance, so they finally decided they were spending too much and it wasn't worth it," he said.
A big argument against the practice of white labeling is that consumers don't know where the reports are coming from - or if they're accurate and thorough, for that matter.
And there are issues of liability. If the brokerage is not the company that actually prepared the report, does the brokerage take legal responsibility for the report if it's incorrect? Does the errors and omissions insurance of the brokerage cover the consumer who received an incorrect report?
These are questions I hope Lois Lauer Realty customers never have to ask.
This is my last planned blog article for Century 21 Lois Lauer white labeling. However, if anyone has something more to add, please contact me. I will be happy to keep your name confidential.
Saturday, June 13, 2009
RESPA changes fuel confusion
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!
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!
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.
Thursday, May 7, 2009
AB 957 moves closer to passage
Great news, folks! The California Assembly Judiciary Committee voted unanimously this week in favor of Assembly Bill 957, "The Buyer's Act!"
For those of you who aren't up on this legislation, it would allow buyers of bank-owned properties to use their own title and escrow companies, as opposed to banks dictating those choices for them. Consumers who aren't allowed to pick their own title and escrow companies often end up paying up to twice as much in escrow fees to out-of-the-area escrow offices that don't even provide decent service.
Let's all stay on top of this important new bill as it will soon go before the entire state Assembly prior to going to the Senate and governor's desk! If you want to stay on top of the news, please sign up to have my posts sent to you directly.
For those of you who aren't up on this legislation, it would allow buyers of bank-owned properties to use their own title and escrow companies, as opposed to banks dictating those choices for them. Consumers who aren't allowed to pick their own title and escrow companies often end up paying up to twice as much in escrow fees to out-of-the-area escrow offices that don't even provide decent service.
Let's all stay on top of this important new bill as it will soon go before the entire state Assembly prior to going to the Senate and governor's desk! If you want to stay on top of the news, please sign up to have my posts sent to you directly.
Monday, May 4, 2009
Urge support for AB 957!
Assembly Bill 957, the “Buyer’s Choice Act,” is one of the best — and most needed — pieces of legislation to come down the pike in a long time.
And it's coming up for a vote in Assembly Judiciary Committee on Tuesday (5-5-09). AB 957 allow buyers of bank-owned properties to use their own title and escrow companies, as opposed to banks dictating those choices for them. In many cases, banks have been requiring that buyers use the title and escrow companies the banks have contracts with.
It’s a chummy relationship that often causes local homebuyers to pay up to twice as much in escrow fees to out-of-the-area escrow offices that often provide substandard service to the buyer. The federal 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.
So this practice is not only expensive — it’s just wrong.
I encourage readers, brokers, real estate agents and other industry professionals to contact Assembly Judiciary Committee members right away and urge them to vote in support of AB 957. Let’s put some ethics back into the industry. For more industry news, log onto RESPAnews.com.
Here's a form letter that was posted on RE Insider that you can sign and fax to Assembly Judiciary Committee members:
Dear Assembly Member:
I support AB 957, The Buyer’s Choice Act. This is important legislation that affects my business and must be enacted!
I understand that this bill will prohibit banks (sellers who acquired title to residential real property at a foreclosure sale) from requiring the buyer to purchase title insurance or use escrow services chosen by the seller/bank. And it would prohibit a seller/bank from, without good cause, disapproving the use of a title or escrow company chosen by the buyer.
Of particular importance is the language in the bill that prevents a bank who is a seller from disapproving of a buyer’s choice of title, escrow and settlement companies without good cause. This will help prevent the current practice of large banks from putting inappropriate pressure on buyers to agree to use companies that provide an advantage to the banks in the transaction.
This bill will put the choice of affiliate services back where it belongs, with the consumer. Thank you for undertaking this important legislation in California.
Sincerely,
____________________________(Signature)
____________________________(Printed Name)
____________________________(Company Name)
____________________________(Street Address, City, State, Zip)
____________________________(Phone Number)
CC: Assembly Member Cathleen Galgiani, FAX 916-319-2117
Assembly Judiciary Committee
Assemblymember Mike Feuer (D) - ChairState Capitol, Room 3146, Sacramento, CA 95814. Fax: 916-319-2142. Counties: Portions of Los Angeles. Main Cities: Beverly Hills, Sherman Oaks, West Hollywood, West Los Angeles.
Assemblymember Van Tran (R) - Vice ChairState Capitol, Room 4130, Sacramento, CA 95814. Fax: 916-319-2168. Counties: Portions of Orange. Main Cities: Costa Mesa, Garden Grove, Westminster, Fountain Valley, Stanton, Anaheim, Newport Beach.
Assemblymember Julia Brownley (D) State Capitol, Room 2163, Sacramento, CA 95814. Fax: 916-319-2141. Counties: Portions of Los Angeles, Portions of Ventura. Main Cities: Agoura Hills, Calabasas, Los Angeles, Malibu, Oxnard, Port Hueneme, Santa Monica, Westlake Village.
Assemblymember Noreen Evans (D) State Capitol, Room 6026, Sacramento, CA 95814. Fax: 916-319-2107. Counties: Napa, Solano, SonomaMain Cities: American Canyon, Calistoga, Napa, St. Helena, Santa Rosa, Vallejo, Yountville.
Assemblymember Dave Jones (D) State Capitol, Room 6005, Sacramento, CA 95814. Fax: 916-319-2109. Counties: Portions of Sacramento. Main Cities: Sacramento.
Assemblymember Steve Knight (R) State Capitol, Room 2016, Sacramento, CA. 95814. Fax: 916-319-2136. Counties: Portions of Los Angeles, Portions of San Bernardino. Main Cities: Adelanto, Lancaster, Palmdale, Victorville.
Assemblymember Paul Krekorian (D) State Capitol, Room 4005, Sacramento, CA. 95814. Fax: 916-319-2143. Counties: Portions of Los Angeles. Main Cities: Burbank, Glendale, Los Angeles, North Hollywood.
Assemblymember Ted Lieu (D) State Capitol, Room 3173 Sacramento, CA. 95814. Fax: 916-319-2153. Counties: Portions of Los Angeles. Main Cities: Lomita, Torrance, Redondo Beach, Hermosa Beach, Manhattan Beach, El Segundo, Venice, Westchester, West Los Angeles, Marina Del Rey, Playa Del Ray, Mar Vista.
Assemblymember William Monning (D) State Capitol, Room 5150 Sacramento, CA. 95814. Fax: 916-319-2127. Counties: Portions of Monterey, Portions of Santa Clara, Portions of Santa Cruz. Main Cities: Carmel by the Sea, Monterey, Morgan Hill, Santa Cruz.
Assemblymember Jim Nielsen (R)State Capitol, Room 6031Sacramento, CA 95814Fax: 916-319-2102. Counties: Portions of Butte, Colusa, Glenn, Modoc, Shasta, Siskiyou, Sutter, Tehama, Portions of YoloMain Cities: Alturas, Anderson, Chico, Colusa, Orland, Red Bluff, Redding, Weed, Yuba City.
Assemblymember Cathleen Galgiani (D)State Capitol, Room 5155Sacramento, CA 95814Fax: 916-319-2117. Counties: Merced, Portions of San Joaquin, Portions of StanislausMain Cities: Atwater, Lathrop, Merced, Newman, Stockton, Tracy
And it's coming up for a vote in Assembly Judiciary Committee on Tuesday (5-5-09). AB 957 allow buyers of bank-owned properties to use their own title and escrow companies, as opposed to banks dictating those choices for them. In many cases, banks have been requiring that buyers use the title and escrow companies the banks have contracts with.
It’s a chummy relationship that often causes local homebuyers to pay up to twice as much in escrow fees to out-of-the-area escrow offices that often provide substandard service to the buyer. The federal 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.
So this practice is not only expensive — it’s just wrong.
I encourage readers, brokers, real estate agents and other industry professionals to contact Assembly Judiciary Committee members right away and urge them to vote in support of AB 957. Let’s put some ethics back into the industry. For more industry news, log onto RESPAnews.com.
Here's a form letter that was posted on RE Insider that you can sign and fax to Assembly Judiciary Committee members:
Dear Assembly Member:
I support AB 957, The Buyer’s Choice Act. This is important legislation that affects my business and must be enacted!
I understand that this bill will prohibit banks (sellers who acquired title to residential real property at a foreclosure sale) from requiring the buyer to purchase title insurance or use escrow services chosen by the seller/bank. And it would prohibit a seller/bank from, without good cause, disapproving the use of a title or escrow company chosen by the buyer.
Of particular importance is the language in the bill that prevents a bank who is a seller from disapproving of a buyer’s choice of title, escrow and settlement companies without good cause. This will help prevent the current practice of large banks from putting inappropriate pressure on buyers to agree to use companies that provide an advantage to the banks in the transaction.
This bill will put the choice of affiliate services back where it belongs, with the consumer. Thank you for undertaking this important legislation in California.
Sincerely,
____________________________(Signature)
____________________________(Printed Name)
____________________________(Company Name)
____________________________(Street Address, City, State, Zip)
____________________________(Phone Number)
CC: Assembly Member Cathleen Galgiani, FAX 916-319-2117
Assembly Judiciary Committee
Assemblymember Mike Feuer (D) - ChairState Capitol, Room 3146, Sacramento, CA 95814. Fax: 916-319-2142. Counties: Portions of Los Angeles. Main Cities: Beverly Hills, Sherman Oaks, West Hollywood, West Los Angeles.
Assemblymember Van Tran (R) - Vice ChairState Capitol, Room 4130, Sacramento, CA 95814. Fax: 916-319-2168. Counties: Portions of Orange. Main Cities: Costa Mesa, Garden Grove, Westminster, Fountain Valley, Stanton, Anaheim, Newport Beach.
Assemblymember Julia Brownley (D) State Capitol, Room 2163, Sacramento, CA 95814. Fax: 916-319-2141. Counties: Portions of Los Angeles, Portions of Ventura. Main Cities: Agoura Hills, Calabasas, Los Angeles, Malibu, Oxnard, Port Hueneme, Santa Monica, Westlake Village.
Assemblymember Noreen Evans (D) State Capitol, Room 6026, Sacramento, CA 95814. Fax: 916-319-2107. Counties: Napa, Solano, SonomaMain Cities: American Canyon, Calistoga, Napa, St. Helena, Santa Rosa, Vallejo, Yountville.
Assemblymember Dave Jones (D) State Capitol, Room 6005, Sacramento, CA 95814. Fax: 916-319-2109. Counties: Portions of Sacramento. Main Cities: Sacramento.
Assemblymember Steve Knight (R) State Capitol, Room 2016, Sacramento, CA. 95814. Fax: 916-319-2136. Counties: Portions of Los Angeles, Portions of San Bernardino. Main Cities: Adelanto, Lancaster, Palmdale, Victorville.
Assemblymember Paul Krekorian (D) State Capitol, Room 4005, Sacramento, CA. 95814. Fax: 916-319-2143. Counties: Portions of Los Angeles. Main Cities: Burbank, Glendale, Los Angeles, North Hollywood.
Assemblymember Ted Lieu (D) State Capitol, Room 3173 Sacramento, CA. 95814. Fax: 916-319-2153. Counties: Portions of Los Angeles. Main Cities: Lomita, Torrance, Redondo Beach, Hermosa Beach, Manhattan Beach, El Segundo, Venice, Westchester, West Los Angeles, Marina Del Rey, Playa Del Ray, Mar Vista.
Assemblymember William Monning (D) State Capitol, Room 5150 Sacramento, CA. 95814. Fax: 916-319-2127. Counties: Portions of Monterey, Portions of Santa Clara, Portions of Santa Cruz. Main Cities: Carmel by the Sea, Monterey, Morgan Hill, Santa Cruz.
Assemblymember Jim Nielsen (R)State Capitol, Room 6031Sacramento, CA 95814Fax: 916-319-2102. Counties: Portions of Butte, Colusa, Glenn, Modoc, Shasta, Siskiyou, Sutter, Tehama, Portions of YoloMain Cities: Alturas, Anderson, Chico, Colusa, Orland, Red Bluff, Redding, Weed, Yuba City.
Assemblymember Cathleen Galgiani (D)State Capitol, Room 5155Sacramento, CA 95814Fax: 916-319-2117. Counties: Merced, Portions of San Joaquin, Portions of StanislausMain Cities: Atwater, Lathrop, Merced, Newman, Stockton, Tracy
Friday, May 1, 2009
Bundling - for home buyers it's baffling
In some industries, bundling is a good thing.
Take AT&T, for example. They offer discounts for bundled services that include your home phone, Internet and advanced TV. The company touts its residential bundled services as a plan that "allows you to integrate all of your home services for less." Having it all in one package --the upshot? It provides "savings over traditional telecom services and up to 20 percent savings over ala carte options.”
That and similar scenarios seem to make sense. But I'm hearing about others kinds of bundling going on in the housing industry where title companies and banks are getting a little too chummy for their own good. In other cases, its banks and the asset management companies they deal with. Those are the businesses that sell off foreclosed properties on behalf of banks.
I'm hearing about these kinds of services being bundled exclusively together - services that aren't necessarily supposed to come together in one package and in fact, when they do specifically violate RESPA.
Here's the scenario: A title company comes to a bank and says, "We'll give you a discount if you put all of your title insurance through us - it'll be MUCH cheaper."
Or maybe the REO asset management company guarantees a similar break in price if the bank funnels all of its foreclosed properties to them.
These kinds of deals may well be cheaper for the bank. But they're also illegal under the California insurance codes and other mandates which also include HUD and its RESPA law that regulate these companies. If the inducement is volume discounts, and the discount is passed inside between affiliate service sellers and NOT the buyer – well it’s downright illegal – plain and simple.
I put in a few calls about this to some banks, but never heard back. I also called REO World, which describes itself as "the premier asset management company representing foreclosed properties in the Western & Central United States."
I finally did get a return call from them while I was in line at the grocery store. When the female REO World representative identified herself, I figured I was finally going to get some kind of perspective on this thing. But I was in line and about ready to pay, so I asked her if I could call her back in two minutes. Her response caught me off guard.
"I can save you some time," she said. "We're not interested in making any kind of comment. Our comment is, ‘No Comment.’”
So that was the end of that. It seems that no one wants to talk about this, but I know it's going on. And you can probably draw your own conclusions too. If these transactions are transparent, then why the “no comment” line? Because they aren’t transparent, probably aren’t legal and appear to be insidious.
An April 2007, a report by the U.S. Government Accountability Office said actions are needed to improve oversight of the title industry and better protect consumers.
The report said that investigations by the Department of Housing and Urban Development (HUD) and state insurance regulators have identified instances of alleged illegal activities within the title industry that appeared to take advantage of consumers' vulnerability by compensating Realtors, builders and others for consumer referrals. Combined, the report said, "…these factors raise questions about whether consumers are overpaying for title insurance."
I can understand companies wanting to make money - that's the American Way, after all. But it has to be done legally - and ethically. If you're setting up an arrangement where services are bundled together in an illegal manner, it's just wrong.
And who gets the short end of the stick?
The home buyer and seller. Their real estate agent. The American Public.
Take AT&T, for example. They offer discounts for bundled services that include your home phone, Internet and advanced TV. The company touts its residential bundled services as a plan that "allows you to integrate all of your home services for less." Having it all in one package --the upshot? It provides "savings over traditional telecom services and up to 20 percent savings over ala carte options.”
That and similar scenarios seem to make sense. But I'm hearing about others kinds of bundling going on in the housing industry where title companies and banks are getting a little too chummy for their own good. In other cases, its banks and the asset management companies they deal with. Those are the businesses that sell off foreclosed properties on behalf of banks.
I'm hearing about these kinds of services being bundled exclusively together - services that aren't necessarily supposed to come together in one package and in fact, when they do specifically violate RESPA.
Here's the scenario: A title company comes to a bank and says, "We'll give you a discount if you put all of your title insurance through us - it'll be MUCH cheaper."
Or maybe the REO asset management company guarantees a similar break in price if the bank funnels all of its foreclosed properties to them.
These kinds of deals may well be cheaper for the bank. But they're also illegal under the California insurance codes and other mandates which also include HUD and its RESPA law that regulate these companies. If the inducement is volume discounts, and the discount is passed inside between affiliate service sellers and NOT the buyer – well it’s downright illegal – plain and simple.
I put in a few calls about this to some banks, but never heard back. I also called REO World, which describes itself as "the premier asset management company representing foreclosed properties in the Western & Central United States."
I finally did get a return call from them while I was in line at the grocery store. When the female REO World representative identified herself, I figured I was finally going to get some kind of perspective on this thing. But I was in line and about ready to pay, so I asked her if I could call her back in two minutes. Her response caught me off guard.
"I can save you some time," she said. "We're not interested in making any kind of comment. Our comment is, ‘No Comment.’”
So that was the end of that. It seems that no one wants to talk about this, but I know it's going on. And you can probably draw your own conclusions too. If these transactions are transparent, then why the “no comment” line? Because they aren’t transparent, probably aren’t legal and appear to be insidious.
An April 2007, a report by the U.S. Government Accountability Office said actions are needed to improve oversight of the title industry and better protect consumers.
The report said that investigations by the Department of Housing and Urban Development (HUD) and state insurance regulators have identified instances of alleged illegal activities within the title industry that appeared to take advantage of consumers' vulnerability by compensating Realtors, builders and others for consumer referrals. Combined, the report said, "…these factors raise questions about whether consumers are overpaying for title insurance."
I can understand companies wanting to make money - that's the American Way, after all. But it has to be done legally - and ethically. If you're setting up an arrangement where services are bundled together in an illegal manner, it's just wrong.
And who gets the short end of the stick?
The home buyer and seller. Their real estate agent. The American Public.
Subscribe to:
Posts (Atom)
