Escrow officer’s selective practices

As you remember, the point of my investigation is to bring to the surface violations in the California real estate market. Certain lack of protection and accountability to homebuyers when they are making the largest purchase of their lifetime is fueling my interest in this subject. In particular, my current effort is on escrow diversions. I am finding that on many occasions Escrow officers are deliberately ignoring written instructions in RPA’s from buyers and sellers.

Can an escrow officer breach their commitment to impartiality? This is hot material! One of the biggest complaints I hear is that buyers and sellers select a particular settlement service company but their selection is overwritten by the escrow officer during closing. So last week I called over 20 different Southern California Escrow companies to see if I could get someone on the phone to talk to me about this switcharoo.

Folks, getting an Escrow manager or officer to speak to me on the phone is not easy. In many cases, when I told the receptionist why I was calling, I was put on hold and then into a voice mail. In other cases, I was forwarded to a manager in another regional office or sent to their corporate offices. Going one better Stewart Title sent me to their Public Relations agency! And in each engagement the response was virtually the same. No response. No response. However, I was lucky enough to get managers from different Chicago Title & Escrow branches on the phone. Success!

Chicago Title & Escrow is one of the firms I hear complaints about. I was thrilled to get not one but TWO folks from the company to speak with me. My first interview was with “Dave” (not his real name) from Chicago Title & Escrow’s LaJolla office. “Dave” openly acknowledged that Chicago Title & Escrow funnels business to their sister company, Chicago Title Insurance. “Dave” explained that by using a sister company, they were able to manage expectations and work with people they trusted. Nice PR answers but is it legal? Are the buyers and sellers aware that their decision is funneled to the escrow’s sister company? Is ownership disclosed and agreed in writing by the parties? My understanding is that HUD considers this practice to be a violation of RESPA. Am I wrong? Is any escrow officer willing to respond? Is a HUD/RESPA agent willing to respond?

My last call of the day was to Chicago Title’s Temecula office, who forwarded me to “Martha,” (not her real name) who discussed the practice of Escrow officers being paid on referral aka “on title” (usually around $50) as an incentive for them to recommend their company’s sister title services. When I asked “Martha” about recommending settlement services, she was quick to reiterate that that Escrow officers were not allowed to change the buyer’s/seller’s selected vendors. When pushed, however, “Martha” admitted that there were bad eggs in every industry.

So how does this affect you? You as a buyer and or seller trusted your escrow agent and believed that he she will review the legal documents and advice you in the event that your instructions were to be changed. Now, how do you feel knowing that your instructions were ignored?

While the escrow industry remains impacted by the economy and more escrow officers are let go, my chances of getting to talk with an escrow officer (or former) are getting brighter. Have you got an experience of an ignored instruction in an RPA? If so, I’d love to hear from you and pursue this further. And I will keep your name and situation anonymous if you’d like.

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CALIFORNIA REAL ESTATE AGENTS & BROKERS — TAKE BACK YOUR RIGHTS! YES ON AB 957 — TELL YOUR LEGISLATOR BEFORE MONDAY! Proposed Law Will Change Your Real Estate Business Forever!

The California State Assembly is about to vote into law a bill that could potentially change your real estate business forever. This fast-tracked Assembly Bill 957 is also called “The Buyer’s Choice Act” and is being sponsored by Assemblywoman Cathleen Galgiani.

Who is opposing this Bill? The same banks that asked the federal government for authorization to sell real estate directly to the public so they could bypass real estate agents. Banks wanted control before and they want it now. You can take back your rights and the rights of your clients by acting now.

The proposed law will empower agents by mandating that the choice of affiliate services is to be made by the buyer and their agents, not by the bank, on all REO transactions.

As you know, agents are often named defendants in lawsuits for inaccurate information or misinformation provided in reports by affiliate services. Recently, it has been revealed that some banks, escrow, title companies and REO asset management groups have been not only dictating which affiliate services are used in your transactions – despite your professional experience – but also in spite of the California law that holds YOU, as the agent, responsible for their bad choices!

Like you, we at RE Insider think the choice of affiliate services in REO transactions should be made by the persons who are ultimately affected, and not be controlled by banks and self-interested title companies.

In order for AB 957 to pass, the real estate community needs to come together and understand what is at stake if this bill is not passed. We need your “Yes on AB 957” help. Right now!

This bill goes before the Banking and Finance Committee this coming MONDAY, April 20th. Your support is needed NOW in the form of a fax or letter sent to the Assembly member of your area who sits on this committee or to the chair of the Banking and Finance Committee, Pedro Nava.

By sending your letter supporting AB 957 your Assemblyman will know that you support your buyer’s right to choose. All you have to do is identify where you work or live, print out, sign and fax the following letter to indicate your support.

Take back control of your transactions!

Serena Ehrlich
RE Insider News, Editor
https://reinsider.wordpress.com
_______________________________________________________________________________________
Summary of AB 957
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.

Author of AB 957
Assembly Member Cathleen Galgiani
State Capitol, PO Box 942849
Sacramento, Ca. 94249
FAX (916) 319-2117

INSTRUCTIONS: Copy the following letter, and paste it into a Word document. Or click here to print directly. For your convenience, Assembly member contact information and representation areas are at the bottom of this ACTION ALERT.

Sign and fax this document today to both your local representative, and to the bill’s author, Assembly member Cathleen Galgiani, to demonstrate your support.

RE: Assembly Bill 957 – The Buyer’s Choice Act

Dear Assembly Member:

I am in support of the bill that will enact the Buyer’s Choice Act in residential real estate transactions in California.

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.

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.

Regards,

____________________________
(Signature)

____________________________
(Printed Name)

____________________________
(Company Name)

____________________________
(Street Address, City, State, Zip)

____________________________
(Phone Number)
CC: Assemblywoman Cathleen Galgiani, FAX (916) 319-2117

Santa Barbara and Ventura Counties: Buellton, Solvang, Carpinteria, Goleta, Oxnard, Santa Barbara, Ventura
Assembly Member Pedro Nava – Chair
FAX (916) 319-2135

Alpine, El Dorado, Placer and Sacramento Counties: Auburn, Placerville, Rio Linda, Rocklin, Roseville South Lake Tahoe
Assembly Member Ted Gaines – Vice Chair
FAX (916) 319-2104

San Diego County: La Mesa, El Cajon, Santee, Lakeside, Winter Gardens, Bostonia, Granite Hills, Alpine, Harbison Canyon, Crest, Ramona, San Diego Country Estates, Rancho San Diego, Jamul, Casa de Oro – Mt. Helix, Jacumba, Campo, Lake Moreno, San Diego
Assembly Member Joel Anderson
FAX (916) 319-2177

Napa, Solano and Sonoma Counties: American Canyon, Calistoga, Napa, St. Helena, Santa Rosa, Vallejo, Yountville
Assembly Member Noreen Evans
FAX (916) 319-2107

Santa Clara County: Cupertino, Mountain View, San Jose, Santa Clara, Sunnyvale
Assembly Member Paul Fong
FAX (916) 319-2122

Los Angeles County: North Hollywood, Pacoima, Panorama City, San Fernando, Sun Valley, Sylmar
Assembly Member Felipe Fuentes
FAX (916) 319-2139

Los Angeles County: Artesia, Buena Park, Cerritos, Hawaiian Gardens, Lakewood, Norwalk, Santa Fe Springs, Whittier
Assembly Member Tony Mendoza
FAX (916) 319-2156

San Mateo and Santa Clara Counties: San Carlos, Redwood City, Menlo Park, Woodside, Portola Valley, Atherton, East Palo Alto, Palo Alto, Los Altos, Los Altos Hills, Monte Sereno, Los Gatos, San Jose
Assembly Member Ira Ruskin
FAX (916) 319-2116

Alameda County: Alameda, Oakland, Piedmont
Assembly Member Sandre Swanson
FAX (916) 319-2116

Los Angeles and San Bernadino Counties: Chino, Montclair, Ontario, Pomona, Guasti
Assembly Member Norma Torres
FAX (916) 319-2161

Orange County: Costa Mesa, Garden Grove, Westminster, Fountain Valley, Stanton, Anaheim, Newport Beach
Assembly Member Van Tran
FAX (916) 319-2168

Fidelity National Title Insurance Settles 2000-2002 Court Case

On March 30th, The OC Register reported that Fidelity National Title was to pay $345K in penalties to settle a 00-02 stemming from charges in employees were accused of accepting kickbacks in exchange for referrals (Fidelity made no admission of guilt).

Kick backs are just one example of a RESPA violation – a buyer will ask to work with company A, but instead the escrow officer goes with company B in exchange for financial incentives or gifts. Meanwhile, you, the buyer, receive a service provided by a potentially less capable company. Considering how much trust one puts into the home buying services they request, this is a true breach of trust.

Here are links to the OC Register article as well as the Sacramento Business Journal‘s piece:

Click here to see the accusations against Fidelity (court filing): http://www.docstoc.com/docs/5168659/Court-documents–Accusations-Against-Fidelity-National-Title-Insurance-Co

And the stipulations with Fidelity (court filing): http://www.docstoc.com/docs/5168660/Court-documents-Fidelity-National-Title-Insurance-Co-Stipulations

 

Have you experienced this kind of activity before? Let me know, I would love to speak with you.

-Serena