AB 957 is Under Attack!

I understand that AB 957 is now facing strong resistance from the usual suspects.  The two large title companies, First American and Fidelity, have been fighting the current version of the bill.  Their business interest in defeating this bill is of course obvious.  Now I understand that in addition to the title companies, lobbyists for a large number of banks have approached Assembly Member Galgiani and they are putting pressure on her to dilute the language in AB 957 to make the bill essentially useless.

The banks and associations that are now working to defeat the current version of the bill include the California Banker’s Association, Wells Fargo Bank, JPMorgan Chase, California Financial Services Association, HSBC Bank, and the California Credit Union League.  This is just a partial list.  I understand that almost twice as many have met with Assembly Member Galgiani or her staff, as I have listed.

The reason for the opposition to the bill is obvious.  The banks’ interest is quite simple.  The banks appear to be saving a lot of money under the current situation because they are getting discounts from the big title companies on title and escrow services for REO transactions. The money incentives are pretty much the end of the story for the banks.

By the way, the buyers and their agents in these REO transactions are not getting discounts, just poor service.

It was not so long ago that the same drive for more money led the banks into the current real estate/financial crisis we are all trying to get through.  With the banks’ track record, I am worried. I will always prefer to go with the independent title, escrow, and natural hazard disclosure providers every time.  By doing so, I trust that my interests and the interests of  buyers and agents will be best served and not compromised by the greedy pursuit of a bank’s big bottom line.  I also know that I’ll get the best service from my local real estate professional who understand the needs of my community and who I can trust.

The reason for large title companies’ opposition to the current version of AB 957 is more insidious and potentially harmful to the California real estate industry. For those large title companies that have already locked-up the REO market, this is all about the future control of the real estate industry.  If they can control a huge percentage of title, escrow and natural hazard business through business arrangements with the banks for long enough, you will see all competitors go out of business.  This leaves just the big title companies to monopolize the real estate services industry.

I expect that in this resulting environment, the service and pricing agents and buyers now receive in a competitive environment will not stay the same if large title companies continue to capture the ancillary services market.  Where can you go in a future controlled exclusively by several big title companies? Nowhere.  It is no accident that title companies have wholly-owned divisions representing nearly every aspect of the real estate industry.  The only thing missing is brokerages.  Now that is a comforting thought!

I question whether the business arrangements between the banks and large title companies for the REO market are RESPA compliant.  My understanding is that these arrangements have come to the attention of government authorities.  Not that we should rely on the federal government to do anything about it.  The wheels of the federal government move slowly and, as we all know, they have a lot on their plate at the moment.  By the time government gets around to making some sort of decision and implementing it, the big title companies will be the only ones left standing.  This is another excellent reason why AB 957 is important. This bill is not a cure-all for everything wrong in the real estate industry, but it sends notice that those of us who do not have truckloads of money and high-priced lobbyists can still rally together to try and keep our industry a place where an individual through skill and hard work can succeed.

Please keep control of the real estate industry where it belongs, which is with the people who work day in and day out with the buyers and sellers of residential property in California, not with giant corporations only interested in their bottom line.

Please support AB 957 by faxing a support letter to our CA Senate Judiciary Committee Members.  Here’s a sample letter, along with the contact list:

June 18, 2009

RE: Assembly Bill 957

Dear Senate Judiciary Committee Member,

This letter is to show my support for AB 957 as long as the language below is included:

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 really makes sense to help eliminate escrow and title from the complete control of banks, including natural hazard disclosure services. I feel that this fair to all employees of these other services whose jobs are at risk by this suspicious business structure between the banks and big title companies. For me, this amendment will help keep your bill aligned with federal regulations under RESPA and it will ensure that the consumer is covered.

Sincerely,

____________________________

(Signature)

____________________________

(Printed Name)

____________________________

(Company Name)

____________________________

(Street Address, City, State, Zip)

____________________________

(Phone Number)

CONTACT INFO:

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