Are Asset Managers Lying?

Is it time that they too come under investigation?

Federal agencies are questioning how banks are handling foreclosures. The banks in turn, have chosen REO specialists to manage and dispose of these “toxic” properties.

Despite all the noise from the Fed and Attorney Generals investigating banks as primary lenders, maybe someone should be looking into how asset managers are handling these very same properties.

Case in point:

According to a recent email forwarded to us, First American is emailing California brokers and agents to say that one particular asset management company has new and exclusive rules, when it comes to any property handled by NRT REOExperts.

…”for all Chase, WAMU and EMC properties you will need to order the NHD Report with First American. First American will supply the report at the approved fee. Any orders placed with another company will be paid by the Listing Agent.”

This sounds like a highly dubious claim.

After all, would a bank in today’s highly contentious and litigious times really require a single sourced provider and incur the full burden of responsibility that might result from any errors or omissions?   Recent examples of this trend are the ongoing Bank of America vs. First American Title lawsuit among numerous others.

Would a bank truly put every real estate agent and broker at litigation risk for their involvement in this sole source practice?  This doesn’t make sense to us; in fact we think it’s worth the Feds looking into these kinds of claims.

So far, we could not get any of the above mentioned banks to confirm that they were aware of this practice nor that this sole source mandate originated with them.
We’d like to know what you think.

WHO IS CUTTING A FAT HOG?

Forbes Magazine reported back in a November 2006 cover story that First American Title was selling more than $5.8 billion dollars a year for title insurance in a story called, “America’s Richest Insurance Racket”  Read the full story here: http://www.forbes.com/forbes/2006/1113/148.html

Reporter Scott Woolley extensively interviewed Parker Kennedy, head of First American.  Forbes noted that thanks to computerized record-keeping, the cost of searching for a home’s ownership records online has fallen to as low as $25. The average cost for claims on title insurance policies was running approximately $74 per policy. Although Forbes concluded that everyone should agree that this is a pretty lucrative business, and title companies are fat and thriving, First American’s Parker Kennedy claimed that “Nobody is cutting a fat hog,” whatever that means.

So why is this relevant to the off shoring of jobs?  According to Forbes, Kennedy attributes his profit margins to several things including the efforts his company has made to deploy technology and move jobs offshore.  Forbes noted that in 5 years, First American closed 48 out of 50 offices in California replacing people and paper with databases and offshore data entry clerks.

Kennedy says, “In the old days, if you wanted to double your business you had to double your people. Now you can double your business and increase your staff maybe 10%.”

The Forbes article suggests that off shoring of jobs has been part of First American’s long term business strategy aimed at adding to the huge profit margins they enjoy.

Given these kinds of profits, do you think it is really necessary for them to continue their policy of sending jobs offshore?

We’d love to hear your thoughts.

Keep Real Estate Jobs in California – Stop the Off-Shoring of Work to India

Our government is showing a callus lack of regard for the well being of workers and consumers in California. Just how, you might ask?

A great example is in 2008 the U.S. government stepped in and bailed out Freddie Mac as part of the effort to save the mortgage industry – jobs and all.  What did Freddie Mac do after it received our hard earned tax dollars? It turned nearly all of its settlement services needs over to one company – First American.

And what did First American do? Replaced jobs in California and sent them to India.

First American makes a significant percentage of its business from California Real Estate professionals, home buyers and sellers and tax payers.  But it continues to send jobs out of state, and out of the country. Talk about biting the hand that feeds you!

Chances are, if you bought a home recently in California, something used in your transaction that was previously “Made in the USA,” now isn’t.

Like you, I am extremely worried about the dwindling number jobs in the California real estate industry.  Especially when a major player like, First American, is dramatically off-shoring American jobs to their subsidiary company First Indian Corporation.

What First American jobs are being performed in India?  Read their press release which states, “The First Indian Corporation’s primary areas of focus include title insurance, property tax, flood certification, default management services, and credit and property information.”

To give you an idea of the scale of how many jobs they are shipping to India’s Bangalore & Hyderabad, check out this link: http://jobsearch.monsterindia.com/searchresult.html?co=xfirstacinx&cat=22

At this difficult time we should consider focusing our tax dollars and support for creating and holding on to American jobs. Let’s keep Californians and all Americans working. What’s so bad about that?

READERS: ACT NOW! Amended AB957 is NOT the Buyer’s Choice

Dear Readers,

Sometimes bad legislation happens. I’m very disappointed to tell you that AB 957 is now anything BUT the Buyer’s Choice Act. In fact, the current version of AB 957 is so bad, we would actually be better off without it rather than to pass AB 957 with the amendments that have been recently added.

Once again, I need your help. Help me stop this bad legislation which will hurt real estate professionals and consumers in our state.

The latest version of AB 957 has appeared with amendments that actually make it easier for the banks to divert services to their big title business partners. The new language says that banks can include a document to the prospective buyer that states they, the banks, have title and escrow services they want to use and to please sign if you agree to use their services. It is not clear if this document appears before or after an offer is accepted. Let me ask you, what buyer is going to decline the bank’s services if they think their offer’s acceptance is at stake?

I have attached the link below for your review.

We at Re-Insider.com are opposed to AB 957 due to its recent amendments, I think once you read them, you will be as well.

So what can you do about this? PLEASE contact your California Senators in your respective voting areas today and tell them that you oppose AB 957 as amended because it will help to put too many independent professionals out of business and out of work. Further it will damage the trust and integrity that every buyer and seller has with their agent and broker.

http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0951-1000/ab_957_bill_20090817_amended_sen_v94.pdf

Click here for a list of the Senators in your respective areas: http://192.234.213.69/smapsearch/framepage.asp

Please call ASAP – TODAY because this bill could go to the Senate as soon as Monday morning.

Thank you,

Serena Ehrlich
RE-INSIDER.com

Congressman Jim Costa Questions Freddie Mac’s Recent Partnership with First American Natural Hazard

Dear Readers,

As you know, I recently wrote an open letter to Freddie Mac’s CEO regarding their recent exclusive partnership with First American Natural Hazard. My concern has always been that arrangements like this are designed to cut out the smaller independent providers and to create situations like the monopoly currently being enjoyed by the two big title companies in CA real estate REO transactions. Well, I am not the only one who feels this way.

CA Congressman Jim Costa (D-Fresno) recently wrote his own open letter to Freddie Mac (click here to view) that includes several questions that we would love to see answered, including:

Did Freddie Mac consider the impact this might have on other independent NHD Report providers? What measures have been taken to ensure that this special deal does not negatively affect California consumers? What benefits does Freddie Mac gain by dealing with First American Natural Hazard Disclosures?

Freddie Mac will have to answer these questions and many others as people both on Capitol Hill and throughout the CA marketplace realize the enormity of the ramifications of agreements such as the one between Freddie Mac and First American Natural Hazard.  Especially in light of the fact that it is our own tax dollars paying to support companies like Freddie Mac who so quickly turn around and engage in practices that ultimately harm CA tax payers .

We will continue to request that Freddie Mac opens the Natural Hazard Reports market to fair and open competition leaving the decision where it is supposed to be, with California home buyers and their real estate agents.

In the meantime, a huge thank you to Rep Jim Costa (D-Fresno) for his efforts!

Serena