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Court Rules in Favor of Home Buyers looking to buy foreclosure REO homes
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Dealing with banks on foreclosed (REO) homes can be pretty difficult at times. Real estate agents representing the banks are overextended being given, at times, blocks of 50 home listings of foreclosed properties. These foreclosures can be any where – Pasadena or the greater Los Angeles area. REO real estate agents can not keep up with their inventory and sometimes home buyers have to wait weeks to hear back from the real estate agent or the asset manager on a decision about their offer to purchase the bank owned home.
Once a decision is made by the asset manager and is communicated to the realtor, the banks send a REO addendum that pretty much dictates to the home buyer which services the bank expects the home buyer to use and takes away most of the rights that the home buyer would standardly have, should they have bought a home via regular home sale and used the standard California Association of Realtors home purchase contracts.
The California State Senate passed a bill Wednesday, September 9th preventing lenders from requiring the use of a specific title or escrow service provider for a buyer of real estate-owned (REO) property.
AB 957, or the Buyer’s Choice Act, passed the senate, 33-4, after lawmakers adopted an urgency clause on Sept. 1. The legislation awaits Gov. Arnold Schwarzenegger’s signature and will take immediate effect upon being signed.
After its introduction in February, the senate passed the bill on May 13, 77-0. Amendments were attached, and the bill went back to the senate for its enrollment in September.
Current federal law prohibits a seller of property to be purchased with federally assisted mortgage loans from dictating to the buyer to purchase insurance from any particular company. The Buyer’s Choice Act expands that policy to single-family REO property until Jan. 1, 2015.
The Act does not prohibit a buyer from accepting a title insurer or escrow agent recommended by the seller if written notice of the right to make an independent selection is provided. Sellers caught violating the Buyer’s Choice Act are liable to the buyer for three times the amount of all charges made for the title or escrow service.
Is this bill going to help? Somewhat… we are certainly moving in the right direction to protect home buyers. Having said that, since there are usually multiple offers involved on well priced foreclosure homes in Pasadena, the banks will continue to dictate their services and terms.
If a home buyer decides not to play by their rules, the bank will move on to the next home buyer.
Now… can we pass a bill that will get these REO real estate agents return their calls and be more respectful and professional? I hope that someone is working on that. What are your thoughts?
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