According to the California Association of Realtors, no seller can require the buyer purchase title insurance from any particular company. This rule pertains to transactions involving a federally-related mortgage loan for one-to-four residential units as defined under the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. section 2608). RESPA requirements apply to REO transactions. If an REO lender chooses the title insurance company, it cannot require (directly or indirectly), as a condition to selling the property, that the buyer purchase the title insurance policy. A lender that violates this requirement can, among other things, be held liable to the buyer in the amount equal to three times the amount of all charges made for such title insurance. Anyone who believes they know of a RESPA violation may file a complaint (and may request confidentiality) to the U.S. Department of Housing and Urban Development (HUD). For more information about filing a RESPA complaint, go to: http://www.hud.gov/offices/hsg/sfh/res/respamor.cfm#HE2
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