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!


Further Discussions Regarding Recent HUD Changes

Dear Readers,

Thank you so much for all the feedback we received on our recent post  regarding HUD adding NHD reports to the list of official settlement services. I received many good comments and wanted to clarify some points that were raised.

  1. We know that a majority of escrow officers handle the accounting of the NHD reports on the HUD-1 correctly. The problem, according to the NHD companies I have interviewed, is not the 80% of escrow officers who account for these services the right way, but the 20% who do not.  You would be surprised at the number of residential real estate transactions that actually close without an NHD report, resulting in panicked real estate agents calling NHD companies to get reports after the fact to ensure their files are complete. You can imagine the legal problems that could arise from that practice. With the NHD reports required to be on the HUD-1 these types of unfortunate mistakes and many others will be greatly reduced.
  2. It is true that in your average residential real estate transaction the seller pays for the NHD report. It is also the case that the buyer typically receives just their side of the HUD-1 showing what they paid for in the transaction. However the complete HUD-1 is the official record of how all monies, both credits and debits, were handled in the transaction. While there are ways to handle miscellaneous expenditures in a transaction, settlement services by law, should only be accounted for on the HUD-1. This is the reason why NHD reports are required to be on the HUD-1 regardless of the buyer’s interest.

Again, I want to thank all of you for your comments and keep them coming!  I would love to hear from all my readers.  And please continue to follow along with me as I explore different issues facing buyers and sellers in the real estate industry at

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 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.

Click here for a list of the Senators in your respective areas:

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

Thank you,

Serena Ehrlich

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