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.

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?

Freddie Mac is Off-Shoring American Jobs

By now you know that I’ve raised several concerns about Freddie Mac and their seemingly exclusive partnership with First American in the California real estate market.  (See my earlier stories here)

At a time when our country is desperate for lack of jobs, when our President in his State of the Union calls for a new jobs program, how, I ask, is it possible that our government is continuing support companies and programs that outsource critical jobs to India?

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

I am not naïve. I understand the cheap labor pool and other corporate benefits of off shoring.  But First American’s First Indian isn’t just handling mortgage services for Indian properties.  They are doing the work that Americans use to do for transactions on American soil.  And they are not just performing the services for First American clients, but those of Freddie Mac as well.

So what First American jobs are being performed in India?  According to their press release, “The First Indian Corporation’s primary areas of focus include title insurance, property tax, flood certification, default management services, and credit and property information. The company assimilates and delivers information that helps First American customers make decisions, operate their businesses and advance their lives.”

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

In 2008 the US government stepped in and bailed out Freddie Mac in an effort to save the mortgage industry – jobs and all.  In 2010, President Obama’s State of the Union Address restated his desire to help keep the American worker employed.

So why, I ask, would this government-owned company, Freddie Mac, continue to align themselves with a partner who so obviously sends these jobs off-shore, away from the American worker?     Why haven’t they found a partner who provides both the quality information needed as well as support American-based jobs?  We know Freddie Mac will have many responses to their RFP from America companies.  They need to choose one. Now.

As you know, we sent a note to Freddie Mac last week, looking for answers on why they refuse to complete their own RFP process.  So far we have had no response.  We welcome you to contact them, as well as others politicians, like the ones below, to try to get some answers.

An open letter to the NEW CEO of Freddie Mac: While Freddie Mac Fiddles, California Burns

January 18, 2010

Charles E. “Ed” Haldeman, Jr
Chief Executive Officer
Freddie Mac
8200 Jones Branch Drive
McLean, VA 22102-3110

Dear Mr. Haldeman:

This is not my first time writing Freddie Mac, HUD and U.S. senators regarding Freddie Mac’s seemingly anti-competitive actions in the California marketplace.

Last year, I wasn’t alone in calling out Freddie Mac’s unfair practices. It was echoed in other media and even among several lawmakers.  In particular I’m concerned with unresolved and continuing questionable business practices in the California real estate market.

In early 2009, Freddie Mac sent out a Request for Proposal (RFP) to a group of pre-selected Natural Hazard Disclosure (NHD) companies in California.  This, immediately, got my attention. By limiting the companies who received the RFP to First American and several small regional companies unable to meet the RFP requirements, while excluding qualified NHD companies from being considered, Freddie Mac succeeded in short changing the American home buyer by removing their right to choose from a collection of qualified providers.  Mr. Haldeman, as you can see, this exclusion lends further credence to the idea that your organization wasn’t acting with transparency, openness or fairness during this very influential process.  In fact, it appeared that Freddie Mac was attempting to pre-determine the “winner.”   And by selecting only one provider for these services, it appears California home buyers and sellers were the ones who would be shortchanged.

After my letter and others, most notably one from Sen. Jim Costa (D-Fresno), were sent, Freddie Mac appeared to relent and issued a second RFP, giving new firms about 48 hours to respond so they could be considered as additional Freddie Mac approved NHD report providers.  Despite the short time frame, several NHD firms submitted completed RFPs and began to wait to hear a decision from Freddie Mac.

And now, months and months later, they continue to wait.

And while these companies wait, Freddie Mac continues to treat First American Title’s FANHD as their preferred and only provider.

What amazes is me, is that nearly a year later; these qualified NHD firms continue to wait for a response from Freddie Mac.   Each time a firm contacts Freddie Mac, they are told that “Freddie Mac is too busy to respond to RFPs,” despite having issued one.

Mr. Haldeman, why won’t Freddie Mac respond?  It is no secret to those of us in the industry that Freddie Mac is using First American Title’s FANHD, nor is it a secret that First American Title CFO, Anthony “Buddy” Piszel used to be Freddie Mac’s CFO.

May I remind you the threat to harm competition is contemplated in the California Business & Professions Code Section 17200 as unfair business practices. In addition, from what I can find, this arrangement appears not comply with federal and California antitrust and unfair competition laws, and could possibly be a violation of the Sherman Act.

I imagine that you are aware that Natural Hazards Disclosure Reports are a settlement service as defined by, and regulated by HUD (the Department of Housing and Urban Development). Consequently, exclusive business arrangements like this one between Freddie Mac and First American could easily merit a look to see if they have restricted competition and thus, eliminated small companies and jobs in the state of California as well as a RESPA violation.

Mr. Haldeman, while you were not Freddie Mac’s president when the exclusive agreement between Freddie Mac and First American took place; you are now.  Stop this unfair exclusive agreement designed to eliminate competition and jobs in California.

I look forward to your reply,

Serena Ehrlich
Publisher and Editor,
RE-INSIDER

CC:     HUD (Housing and Urban Development)
FHFA (Federal Housing Finance Agency)
GAO (General Accounting Office)
Senator Feinstein
Senator Boxer

Following Up on Freddie Mac: What Has Happened?

Well it has been 4 months since we last looked in on Freddie Mac and the relationship it has with First American.

At that time we had a lot of response from legislators, both state and federal, asking Freddie Mac for an explanation on this anticompetitive and potentially non RESPA compliant business relationship they have with First American disclosures.

Freddie Mac responded to all of these inquiries by issuing a statement saying they did not have an exclusive relationship with First American disclosures.

Please note, this statement was a direct contradiction of the memo Freddie had previously sent out under the banner of its Homesteps division directing real estate agents that First American disclosure reports were required for Freddie’s REO properties. Freddie went on to say they had sent out RFPs to a number of disclosure companies in California at the beginning of 2009 and no one who met their standards responded except First American.

In talking to a number of other disclosure companies in California I discovered that the only ones which received the initial RFPs from Freddie Mac were several regional disclosure companies who would have not met Freddie’s criteria to become a supplier of disclosure reports. Somehow the disclosure companies which would have qualified never received an RFP.

How convenient for First American.

It seemed that Freddie had decided to relent early this fall due to pressure it received from legislators and reissued the RFP to all the disclosure companies that did not receive one originally.

So we’d assume that everything is being fairly handled, right? Well, maybe not quite.

From what I can tell in my research, it now seems Freddie sent out a much more complex, completely different RFP to First American’s competitors than it originally sent out in the beginning of 2009. On top of that they put a 48-hour deadline on the companies to return the RFP to them in order to be considered for supplying reports. On the surface it would appear that Freddie wanted to resolve this issue quickly and fairly.

Here we are now at the end of the year, and months have gone by since the 48-hour deadline.

The problem?  I am still getting feedback from the disclosure companies who completed and submitted these RFPs saying that they never heard back from Freddie Mac, despite submitting their RFP responses within the 48 hour deadline.

One company told me that their inquires into Freddie Mac about the status of  their RFP were met with a cool response, “Freddie Mac is too busy to deal with the RFPs at this time, maybe later.”

I am sorry to report that despite all the initial responses by Freddie Mac, in fact, nothing has changed.   Freddie Mac and First American are continuing on with their questionable, seemingly exclusive, business relationship and those firms who submitted RFPs are being stalled.

Have you seen anything like this in your marketplace?  Are you being stalled by Freddie Mac?  If so, let me know, I would love to speak with you!