Finally! For those of you who read my blog recall my recent blog post on buying a foreclosure and not receiving your keys until the day after it closes, it appears that the California legislature has taken a stab at the heart of the problem, which was the fact that buyers were not allowed to pick their own escrow companies in these transactions. Banks would hire title and escrow companies to complete their foreclosure proceedings and when they turned around to sell the property as an REO, they would compel the buyer to use that same title/escrow company to complete the purchase.
Often, those companies would offer the banks a discount for the repeat business, but some of the fees charges to buyers were excessive. The problems were due mainly to the fact that these title companies were no longer accountable to both sides in the transaction. In addition, their workload was very high while even the local offices of the same companies sat around with little or no work. Commmon courtesy, reasonable fees, and familiarity with local county recorder’s customs went out the door as escrows were outsourced to Lancaster, San Diego and Pasadena, to name a few.
Effective immediately, the new law requires that if a buyer chooses to use the seller’s escrow company in a foreclosure purchase, that they be given written notice of their right to choose another company and that their choice will not affect whether or not they can buy the property. Bravo! This will certainly make a difference, as I can advise my clients as to the worst of the worst of these companies and they can choose to avoid them, and also because it now gives all those companies an incentive to return to customer service — so maybe they will return to basics and begin answering the telephone again and doing their job! Only time will tell if this law has enough teeth, but I am happy to see this step in the right direction. I just got my first escrow choice disclosure for a new REO deal today!
