Over the last year I’ve been seeing a disturbing trend on the closing statements of my clients buying bank owned homes in Roseville and Sacramento. The escrow fee has been downright outrageous! At first I thought it was just a couple abnormalities in the escrow world but it continued to happen and happen.
It turns out that it’s a matter of the banks using certain escrow companies based in Southern California. These banks and asset managers would use just one escrow office for ALL of the homes they were selling. I can’t say for sure why that equals escrow fees being three or four times what they would be otherwise but I have my ideas. The simplest of which is the idea that these escrow offices upped their fees knowing they have an unending stream of escrows for all of the homes these banks are selling. Knowing full well the seller has NO CHOICE in the matter so they can charge whatever they want.
Since seeing the trend I’ve been trying to get to all local Real Estate agents my clients are working with before they start writing offers. It seemed no one had caught on just yet. Something had to be in the contract to protect the buyer, our clients. If the bank that is selling the property was to force the buyer to use a particular escrow office, they should share in the pain if the escrow office in question was charging a $2800 escrow fee for a $200,000 purchase.
The state assembly must have channeled my thoughts because there is a bill on the floor. It’s been negotiated by the California Association of Realtors and they have achieved a compromise in AB 957, the ‘Choice of Escrow Bill.’ In multiple discussions with the author, C.A.R. worked with Assemblywoman Galgiani to come up with language that will require fair treatment for buyers of bank owned homes 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.
This new language will bring together California law and federal R.E.S.P.A. rules for selection of title insurance, and extend the same rules to protect buyers in the selection of escrow services. Making it simple, sellers will have to negotiate the selection of title and escrow services. Under the new language, if the seller of a bank-owned property wants to try and direct choice of escrow, the seller will have to pay for the privilege.
To be honest I’m ready to start giving local escrow officers their due. Bring the business home and start saving money for our clients loans here in Roseville and Sacramento.
– The Roseville Loan Expert ~ Greg