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Bill to require REO sellers to pay for escrow

From the newsletter I received from The California Assocation of Realtors.

"C.A.R. Achieves Compromise in AB 957,

Choice of Escrow Bill

C.A.R. achieved a compromise in AB 957, “Choice of Escrow Bill.” In multiple discussions with the author, C.A.R. worked with Assemblywoman Galgiani to come up with compromise language that will require fair treatment for real estate owned (REO) buyers in the choice of title and escrow providers.

The new language now protects fair negotiation over settlement services, and has removed C.A.R.'s opposition.

The new language will codify in California law the federal RESPA rules for selection of title insurance, and extend the same rules to protect buyers in the selection of escrow services. In a nutshell, the sellers will have to negotiate the selection of title and escrow. Under the new language, if an REO seller wants to try and direct choice of escrow, the seller will have to pay for the privilege.

AB 957 will also impose new penalties on REO sellers that violate the law, and will empower state regulators to go after both RESPA and "steering" violations."

Great news for buyers, but possibly bad news for REO sellers and escrow companies.

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Comment by newhome on May 29, 2009 at 1:42pm
Now if an REO seller wants to try and direct choice of escrow, the seller will have to pay for the privilege.
But REO sellers can easily switch the Escrow Closing fee to Doc Prep, Courier, Endorsement fees etc.
Are there any guidelines? What types of Title and Escrow fees should REO buyers resume, such as Title Insurance?
Comment by Nikki Holmes on May 15, 2009 at 1:49pm
One of the problems we all face with representing buyers in REO transactions is that the bank often holds all the cards. More often than not, there are multilpe offers on a property. If your client wants the place, are they going to be demanding about the fees? No, probably not. That would be "Penny wise and pound foolish."

So, if the bank says you pay the fees, and you use our title/escrow company, do you lose out on the property, or play their game.

In practice, more and more I am seeing the bank pony up the escrow fees voluntarilly just for that reason--they know they are violating the rules.
Comment by Johnny Huang on May 6, 2009 at 1:34pm
That's how I'm reading this article. If the seller is requiring to use their Escrow, then the seller must pay for it.
Comment by Jennelle Brownley on May 6, 2009 at 1:22pm
question? if the seller/bank owner counters back to the buyer with the condition that the buyer use.their escrow/title and the buyer accepts it... than what? does the seller/bank owner always have to pay if they suggest inhouse services? if they offer discounted fees to the buyer and the buyer accepts the addendum... then what? is the law just making it possible to negociate who and how much? they can no longer demand it?

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