Assemblymember Cathleen Galgiani, author of the bill, represents the 17th District of California. The 17th District is centered on Stockton and includes neighboring Merced, Tracy & Los Banos – perennial favorites along with our area of Riverside County for Foreclosure City USA. She has no doubt seen the contempt with which some banks hold state and federal law and real estate contracts nationwide.
Unopposed, the bill has passed one committee vote and is headed into another committee. Read the scintillating journey of this bill by clicking on the following title:
C.A.R. achieved a compromise in AB 957, “Choice of Escrow Bill.” In multiple discussions with the author, C.A.R. worked with Assemblywoman Galgiani to come up with compromise language that will require fair treatment for real estate owned (REO) buyers in the choice of title and escrow providers.
The new language now protects fair negotiation over settlement services, and has removed C.A.R.’s opposition.
The new language will codify in California law the federal RESPA rules for selection of title insurance, and extend the same rules to protect buyers in the selection of escrow services. In a nutshell, the sellers will have to negotiate the selection of title and escrow. Under the new language, if an REO seller wants to try and direct choice of escrow, the seller will have to pay for the privilege.
AB 957 will also impose new penalties on REO sellers that violate the law, and will empower state regulators to go after both RESPA and “steering” violations.
Office of Assemblymember Cathleen Galgiani AB 957 – FACT SHEET
Contact: Ashley Carrera 916-319-2017 Page 1
FACT SHEET Assembly Bill 957 (Assemblymember Galgiani) Buyer’s Choice Act
Since the last major bout of foreclosures during the downturn of the 1990’s, a practice has developed in the foreclosure market that is having significant consequences to many groups, including home buyers. Banks and the Housing and Urban Development Department are increasingly requiring the use of specific service providers when they are the seller of residential property, regardless of who pays for the service. This practice is illegal under federal laws and regulations. The current federal law is the Real Estate Settlement Procedures Act (RESPA) which, “Prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.” Assembly Bill 957 seeks to strengthen state law to further curtail this practice. Small businesses are the undisputed heart of the American economy. Local businesses, which offer the best resources and solutions for relieving the current housing crisis, are being shut out of the Real Estate Owned (REO) market. Instead of local businesses assisting homeowners and expediting the transfer of foreclosed properties to purchasers, they’re literally on the outside with no way to get in. Excluding local businesses from competition for services, eliminates local job creation that stimulates local economies and violates anti-competition and anti-trust laws.
PURPOSE OF BILL
Assembly Bill (AB) 957 will enact the Buyer’s Choice Act, which would prohibit a seller of residential property from requiring the buyer to purchase title insurance or use an escrow service company chosen by the seller in connection with the sale. AB 957 would also prohibit a seller of residential property from, without good cause, disapproving the use of a title or escrow company chosen by a buyer. A seller who violates these provisions would be liable to the buyer for a specified civil penalty.
None on file.
None on file.
Assembly Banking and Finance Committee, April 20, 2009