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.


Choosing Quality over an RFP

I wanted to share this recent comment to our last blog post:  Following Up on Freddie Mac: What Has Happened?


I found your post very interesting. Especially the suspicious behavior you cited:

“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.*** ”

“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.***

Maybe we should only buy our disclosure reports from those companies. Please let us know who they are!




Dear Rick,

I wish I could just give you a list and send you on your way.

As you know, when it comes to selecting disclosure service providers, we at RE-Insider continue to encourage realtors to choose their partners based on the product’s quality, accuracy, thoroughness, high-level of customer service, insurance coverage and more.  No matter how it is sliced, there are no shortcuts when making this decision, including a rushed RFP.    We strongly continue to believe that selecting a natural hazards disclosure company based on the submission of an RFP vs. quality of service and the report does not represent the good faith effort that is expected of real estate professionals.

Thank you so much for your question.  I hope this helps, if you have any other questions or comments, please let me know!


Attention! New Additions to What HUD Considers Settlement Service Mean Changes In Escrow Procedures

As I have mentioned many times, my goal at RE-Insider is to keep real estate buyers and, well, the real estate community at large informed on events which impact consumers purchasing houses in the California marketplace.   To follow my investigations or to submit your own ideas for investigations visit me at

HUD recently made additions to the list of official settlement services, covered by RESPA, according to Barton Shapiro, HUD Deputy Director of RESPA and land sales, to now include services such as natural hazard disclosure reports.

Now that natural hazard disclosure statements are included on the list of official settlement services:

  1. The cost of natural hazard disclosure must be included on  HUD1 forms
  2. Natural Hazard Disclosure statements must be paid for before escrow closes

We at are thrilled about this news.  We have long felt that HUD rules often left open loopholes that could be exploited to take advantage of the buyer, especially in the lack of clarity around the naming of settlement services.  By closing this inadvertent loophole, HUD strengthens its role as protector of the consumer.

I highly recommend you take a look at the copy of the HUD memo clarifying settlement services:

An Open Letter to Freddie Mac’s CEO on Your Anti-Competitive Business Practices

John A. Koskinen
Interim Chief Executive Officer
Freddie Mac
8200 Jones Branch Drive
McLean, VA 22102-3110

Dear Mr. Koskinen:

Considering the state of California’s unemployment across its real estate industry, created in part by the most severe mortgage crisis in American history, I’m disturbed by some of Freddie Mac’s most recent anti-competitive actions.

It is surprising to see the new Freddie Mac, under the auspices of the U.S. government, engaging in “questionable” business partnerships that require all buyers of Freddie Mac California REO properties to agree to the use of one company’s Natural Hazard Disclosure (NHD) report – thereby cutting out an entire industry from a consumer’s choice. Specifically Freddie Mac is now requiring the exclusive and sole use of FANHD natural hazard disclosure reports.

As you know, this is the ONLY disclosure source that can inform a buyer of potential problems that may affect the desirability and value of their new home.

This deal seems designed to kill a highly competitive real estate industry, hurt dozens of companies and put hundreds if not thousands of employees out of work.

This exclusive arrangement unfairly “corners” the California market for REO properties and has in fact created a monopoly to the benefit of one company, First American Title’s FANHD. As we all know, eliminating the competition among NHD report providers in the REO market is unethical and against the interests of the buyers.  If fact it could be considered much worse.

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 fails to comply with federal and California antitrust and unfair competition laws, and is in violation of the Sherman Act.

Natural Hazards Disclosure Reports are a settlement service as defined by, and regulated by HUD (the Department of Housing and Urban Development). Consequently, this arrangement certainly appears to be in violation of RESPA Section 8.

And your decision to partner with First American Title is most interesting since no panel has certified this company’s report to be a better or more accurate product than anyone other vendor.  To some, First American Title’s recent hire of former Freddie Mac’s Executive Vice President and CFO, Anthony “Buddy” Piszel raises eyebrows.  Could this new agreement have been part of a package deal in his hiring?

First American Title doesn’t have a pristine reputation either. It is frequently covered in the media as a repeat offender for RESPA violations, having been forced to settle and pay penalties in numerous government lawsuits across the United States.

Please Mr. Koskinen, don’t wait until your personal reputation is besmirched for letting Freddie Mac engage in what the court of public and legal opinion may consider to be a clear RESPA violation and illegal.

California, its people, its institutions and its government need your personal intervention to put an end to this exclusive arrangement between Freddie Mac and FANHD which ultimately will drive First American competitors out of the real estate market, further additional unemployment, reduce badly needed taxes and most importantly be detrimental to the interests of California consumers.

The right to choose an NHD provider should be left to the consumers of the state of California.

I look forward to your reply,


Serena Ehrlich
Publisher and Editor

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

Congratulations! You guys are being taken seriously!

I am pleased to report that thanks to your efforts AB 957 successfully passed the Senate Judiciary Committee last week.

By supporting AB 957, you are sending a clear message to large title companies and large banks that you continue to believe that the choice of real estate services should rest with the buyer and their agent, not with big business who continue to try to silence the voices and choices of independents.

We’re not out of the woods yet, we still have work to do to get it through the next rounds.

Thank you for all of your support. Let’s make this happen!


Who Killed the Real Estate Industry In California?

As you know, the original purpose of AB957 was to try and help independent title and escrow companies compete for business in the REO market.  Now? Now it seems large companies with special interests are trying to generate revisions that would essentially neuter the bill – providing the death knell to real estate jobs in California.

As you can see, these new revisions leave buyers at risk of being overcharged by the same banks that crested this real estate market collapse. Now, those banks are channeling all the Escrow, Natural Hazards Reports and Title business to the largest title companies in the nation thus eliminating those other service providers from the business. Once this practice is established it will send all the title, escrow and natural hazard work FROM California companies TO these out of state giants.

Folks, once the work is gone, so are the jobs.

So what do we do?  We have to get this bill back on track.  Yes, I need your help here.  Please fax Assembly member Cathleen Galgiani
and the Committee person(s) in your district to let them know you want a bill that works for you!

Here is a sample letter to use. Please fax this directly to Assembly member Cathleen Galgiani and to the assembly member for your district (numbers below):

June 4, 2009

RE: Assembly Bill 957

Dear Assembly Member,

As a constituent, I want you to know that I support for AB 957 with its proposed new language:

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.

AB 957 is written to save jobs in the real estate industry. I need your help.

Unless the bill is amended to include all settlement services, the controlled “affiliated” companies owned by the large title companies, will control California’s real estate business and thousands of people may lose their jobs!

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.





(Printed Name)


(Street Address, City, State, Zip)


(Phone Number)


Assembly Member Cathleen Galgiani, FAX 916-319-2117

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: 916-445-9263
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 Diego
Main Cities: San Diego, Del Mar, Lemon Grove

Senator Carol Liu (D)

State Capitol, Room 5061
Sacramento, CA 95814
Fax: 916-324-7453
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

An open letter to California Senators Dianne Feinstein, Barbara Boxer and HUD Secretary Shaun Donovan

Dear Secretary Donovan, Senator Feinstein, and Senator Boxer:

Thank you in advance for your attention to this vitally important matter. As a Californian and a reporter, I am writing this open letter requesting clarity regarding Natural Hazard Disclosure statements and their status within the Real Estate Settlement Procedures Act (RESPA).

In a highly publicized legal action brought by HUD last year, an agreement was made with all parties that the Natural Hazard Disclosure Statement (NHDS) in California would be considered a “settlement service” as part of the escrow process and would be subject to RESPA federal regulations.

While HUD vigorously pursued a determination, they have yet to put in writing the fact that the NHD report is a settlement service under RESPA.

I have spent several months researching the law and inspecting HUD required documents, and along with my associates, have interviewed various HUD executives and experts. We have yet to find anything in writing to indicate that NHD reports in California are to be treated as settlement services.

The NHDS along with the TDS (Transfer Disclosure Statement) are the most important consumer protection documents in a real estate transaction. They are required by law and under the California Civil Code are the only documents that give the buyer the right of rescission during escrow. The NHD report gives notice to the buyer of known material facts that can impact the desirability and/or value of the property.

When you buy a home in California, there are a host of fees charged for “settlement services” that must be paid by the seller before the deal closes. These include such things as city and county taxes; the appraisal fee; the credit report fee; title and escrow fees; and additional costs for such things as insurance and the lender’s inspection fee.

The determination made by the HUD lawsuit was that the NHDS must be included in this list of services; and is thus subject to strict federal laws, and must be paid for before the escrow disburses funds. Furthermore, by not notifying real estate agencies and consumers, they run the risk of being sued for not complying with a federally mandated settlement service.

Although HUD vigorously pursued its belief that NHDS companies are indeed settlement services, they still have nothing in writing that reflects this position to the public.

The fact remains that HUD continues to give out misinformation. For instance, last month one of my associates spoke to Kevin Stevens, a compliance protection specialist with HUD. When asked if NHD’s are a required settlement service in California, he replied they were, and that they were listed in Section 1300 of HUD-1, a document that outlines various settlement services for homebuyers.

Well, I checked and they’re not listed there.

We also asked Brian Sullivan, a HUD spokesman, if NHDS reports are a settlement service and he too said they were ‘most certainly a settlement service,’ and when asked if HUD was enforcing this mandate, he stated, “We believe so. If not, it’s a violation of RESPA.”

So we asked Sullivan that if HUD is really enforcing this new mandate, why weren’t the NHDS included in HUD-1 as a settlement service for real estate transactions that occur in California?” Sullivan didn’t exactly have an answer for that one. “It’s not a requirement across the country, just in certain states,” he said.

No one here at RE-Insider can find any communication from HUD that reflects Mr. Sullivan comments. No mention on HUD-1 was made and there was no official or unofficial communication posted.

Kirsten Ivey-Colson, an attorney with HUD’s Office of Finance and Regulation Compliance, insists that California state law requires that this disclosure is made. “Because it is paid at closing, it appears on HUD-1,” she said.

Well, it doesn’t appear on HUD-1. We checked.

There is nothing that tells buyers, sellers, real estate agents, lenders, title companies or escrow companies in California that NHD’s are a settlement service and legally required.

I believe that as U.S. Senators representing the people of California, you want buyers to receive all legally-required full disclosure documents for the properties they are about to buy. I also believe that it is Secretary Donovan’s agency’s responsibility to ensure that everyone across the board is treated equally and fairly by being made aware of this requirement before they are lead down a legally sticky path of ignorance of the law.

Look at it this way: In the United States of America, we are taught that a law requirement MUST be in writing, posted and readily available. Well, when buying a home, which is the biggest and most important purchase most of us will ever make in our lives, shouldn’t the legal process be transparent?

While this letter comes from me, I urge anyone who will ever consider purchasing a home or who has recently purchased a home to contact Sen. Dianne Feinstein, D-Calif., Sen. Barbara Boxer, D-Calif., and HUD Secretary Shaun Donovan and urge them to bring some clarity to this issue.

Ask them — Is this a service that I, the homeowner, must pay for before my escrow can close? And if I am a real estate agent, or escrow or title officer, must I pay for this service out of escrow monies?

Federal requirements should be able to be read someplace, somewhere. It’s the least we can do for California homeowners and the real estate industry.


Serena Ehrlich

P.S. For those who are interested, here’s the contact information for Feinstein, Boxer and Donovan:

Senator Dianne Feinstein
United States Senate
331 Hart Senate Office Building
Washington, D.C. 20510
Phone: (202) 224-3841
Fax: (202) 228-3954 TTY/TDD: (202) 224-2501

Senator Barbara Boxer
112 Hart Senate Office Building
Washington, D.C. 20510
Phone:(202) 224-3553
Fax;(202) 224-0454 (fax)

Shaun Donovan
Secretary of the U.S. Department of Housing and Urban Development
451 7th Street S.W., Washington, DC 20410
Phone: (202) 708-1112
TTY: (202) 708-1455