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, CA -- Assemblymember Cathleen Galgiani (D - Livingston) announced that Governor Schwarzenegger signed AB 957, “The Buyers Choice Act”, over the weekend. Galgiani’s bill is an urgency measure which means the law will go into effect immediately after being chaptered by the Secretary of State rather than January of 2010.
“This law will ensure that home buyers have the choice of using local escrow companies, which can offer the best resources and service in the current housing crisis. Local escrow businesses can better assist buyers and expedite the transfer of foreclosed properties to homeowners at lower cost,” according to Galgiani. “It also promotes competition for services and protects local jobs and our local economy.”
The Buyers Choice Act” mandates that buyers of bank-owned properties (foreclosed homes) would have the choice of using a local escrow office to handle the transaction. It would prohibit a seller of residential property from requiring or influencing 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.
The foreclosure crisis over the last two years revealed a practice in the 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 have often been 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 mirrors Federal law to do the same with escrow services which are often joined with Title Insurance.
Assemblywoman Galgiani was alerted to the problem by realtors and mortgage industry professionals in the Central Valley. In early January she wrote out the first version of the bill on a napkin while talking with local realtor, Andy Krotik, at the Atwater Chamber of Commerce Annual Crab Feed in her district.
Contact: Robin Adam @ (209) 948-7479
