Escrow Companies on REOs

[Steve L.]

So with REOs 99% of the time the sellers forces that an escrow company of their choosing is used and the escrow companies sure make me feel that way. Often I am reminded by their action (or lack of action) that they work for the bank and not me.

I just closed on a 45k house in SoCal. What is the escrow fee? $850!!! :cry: I questioned how they determined that number. Every REO transaction we charge a minimum of $850... This does not include title insurance, doc fees, traxes anything... Just the escrow fee.

I have typically been paying .2% or so as escrow fees...

Anyone noticed the same thing?

[Jamie Keeton]

Wow... I must say that I am entering this conversation with my head between my legs, as title company manager. I am with a full service title company but we specialize in REO closings. About 8,000 nationally for 2009.

I would like to add my two cents in because 1) hopefully it will confirm that not all of us are bad guys and 2) hopefully it will help you with your future transactions.

1) The seller can dictate who the title company is. However, the buyer always has the option to choose their own title company. As stated above, the seller does in fact remove some of their incentives, such as paying for title insurance. What we do when we find out that someone would rather close with their own title company, we disclose about the possibility of the seller not paying for the title insurance. If they are aware and feel that they would rather pay the insurance and close with their company, we do not "force" them to close with us. We then coordinate with their title company. We close the seller side and they close the buyer side.

2) Shop around with other title companies to see what they are charging. Yes I said that out loud. But I can say that comfortably because our rates are very competitive. Find out up front before signing the contracts what the seller's title co. charges and then see if you can find something more to your expectations. If so, proceed with your title company. From the moment we receive the executed contract, we send out opening letters introducing ourselves and our fees. My employees have 2 days to get this to the realtors and the buyer's lender. This allows for you to address any issues concerning our fees or our company as early as possible.

3) A title company MUST act as a neutral party. Regardless of who the title order came from, both parties are to be represented in the transaction. It is really not that difficult. As a settlement agent, we must comply with the contract terms, buyer's lender terms, and the seller's terms if they are in compliance with the contract.

4) I am curious... when I hear that people are being charged $800 and that doesnt include the title insurance. That sounds excessive. I have personally worked in Ohio, Indiana, Kentucky and Florida. In Ohio, line 1101 to the buyer is usually $200-$400. Down here in Florida, we are required to bundle our fees and it is usually $300-$400. I have seen some companies charging $700.

When your buyer is being charged $800, are they putting all of that on the buyer side or is the $800 split $400 buyer and $400 seller? We offer a lot of services as a convenience to ALL parties on our transactions, such as log in that allows you pretty much full access to our notes and documents. However, we do not charge the buyer and seller for the costs we are paying for this service on the back end.

I see that some "DEMAND" the title company do this or that. In my experience, demanding something usually turns us off. Now if you call and provide legit reasonings as to why your client NEEDS some help on the fees and approach the conversation sympathetically, you will get more results in fee reductions. I recently gave a $100 title credit to a purchaser paying $250,000.00 CASH (no lender). Do we really think he needs a $100 title credit since he can pay $250K in cash? Probably not, but he explained his position and experiences and was KIND. So I granted his wish. But today, I had a mortgage broker charge $4,000 in misc charges who said the buyer was hurting on funds to close and wanted us to close for free. I asked how much he was willing to contribute in addition and all of a sudden it was no longer an issue.

All of this I take into consideration and hopefully I have provided you a new outlook or understanding.