RESPA Section 9 covers the rights of the buyer to choose the title company in a purchase transaction. Sec. 2608 of 
RESPA under the heading of Title companies; liability of seller states:
(a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.
(b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.
Now ask any realtor, banker, or asset manager and this is not the way the REO market has been run. In fact it was the complete opposite, statements like “seller to choose closing attorney”, or “title company seller’s preference” is not only the norm but expected. The original idea was that systems and tools could be put in place to handle large volumes of closings. RESPA obviously saw some risk for corruption, or at the very least, dealings that may not serve the consumer.
The Federal National Mortgage Association (FNMA) must have finally heard this loud and clear because they have now made a dramatic change to their REO addendum on Section 2B, page 1 line 4 to state, “The closing shall be held at a place so designated and approved by the Purchaser.” I would imagine we will start to see many banks follow FNMA’s lead in the future. We’ll see…
For more information on REO Properties go to our Closing 101 section or contact Gareth.
Just wanted to say thank you to our many friends and clients that have made this year extra special. I know we are all busy getting ready for company or going somewhere to be “company”. If you would, look around the table and count your blessings.
