AB 957 -

State Assemblywoman Cathleen Galgiani is leading the charge on AB 957 which proposes to give buyers control of choosing a title and escrow company when buying a bank owned (foreclosed). By allowing the buyer to choose the title and escrow company, this empowers the buyer to negotiate their costs for these services.

We will keep an eye on this one – I personally have not read through the entire bill so I don’t know if there is any special interest legislation included. My take on this is anything that allows the buyer to have more control over their costs is good business!

Following is a Press Release from Galgiani’s office dated April 20th, 2009 – Since this release, the Bill has swept through with little to no resistance. You can track AB 957’s progress here.

Galgiani’s Bill (AB 957) “The Buyers Choice Act” Passes First Hurdle in Assembly Banking and Finance Committee

AB 957 will ensure that homebuyers can use local escrow services to provide better service at lesser cost in the purchase of Bank Owned houses.

SACRAMENTO – Assemblymember Cathleen Galgiani (D- Livingston) guided “The Buyers Choice Act” through the Assembly Banking and Finance committee on Monday by a near unanimous vote of 8 to 1. AB 957 would mandate that buyers of bank-owned properties (foreclosed homes) would have the choice of using a local escrow office to handle the transaction.

“Local escrow companies, which can offer the best resources and service in the current housing crisis, are being shut out of the Bank Owned (foreclosed) housing market”, according to Galgiani. “Instead of local businesses assisting homeowners and expediting the transfer of foreclosed properties to purchasers, they’re literally locked out of the market. Excluding local businesses from competition for services also eliminates local jobs that further harms the local economy and eliminates competition.”

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 home buyers, their realtors and local escrow offices. Banks and other large lenders that have taken possession of foreclosed homes are increasingly requiring that buyers of those properties use escrow companies with which they have contracts regardless of who pays for the service. This practice causes local homebuyers to pay up to twice as much in escrow fees to escrow offices out of the area that provide inadequate service to the buyer.

Currently, federal law called the Real Estate Settlement Procedures Act (RESPA) prohibits a seller of residential property from requiring or influencing a buyer to purchase title insurance from a company chosen by the seller. Assembly Bill 957 seeks to do the same with escrow services which are often joined with Title Insurance.

Assemblymember Galgiani was alerted to the problem by Central Valley industry professionals. Atwater realtor Andy Krotik, Merced mortgage lender Rick Seymore and Tim Eagan of The Escrow Institute of California presented first hand testimony at the Banking and Finance Committee hearing in the Capitol on Monday afternoon.

Realtor Andy Krotik, and Escrow Officer Tami Fournier whom are spearheading the local grass roots movement were very pleased with The Assembly Banking Committee’s broad bi partiscian (8-1) approval. “The fact that support came from both sides of the isle is a demonstration that both parties recognize the injustice to not only home buyers, but small businesses must end,” said Krotik. “We are hearing from interested parties across the state, over 1000 letters of support in a short 4 day period. The out pouring of support for Asemblymember Galgiani’s Bill is a testament to the bill’s merit. We applaud Cathleen for her leadership on the importance of this bill.

AB 957, “The Buyer’s Choice Act”, would prohibit a seller of residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller and 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 civil penalty. AB 957 now heads to the Assembly Judiciary Committee.

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