Something Old, Something New

The almost inexpressible condition of California’s budget and statewide economy continue to overshadow many processes in the state, and our legislature is no exception. As this column is being penned, Governor Brown has proclaimed a fiscal emergency and has presented the legislature with a budget plan that includes $12.5 billion in proposed spending cuts and revenue from tax extensions that voters must first approve. As Governor Brown establishes his leadership team, we can anticipate continued changes within state agencies including the Departments of Insurance, Real Estate, Housing and Community Development as well as possible efforts to review, realign and streamline regulations within many state agencies.

As thirty-one first time legislators and returning legislators and our new governor find their way around the Capitol, the challenge for CEA and other groups with a stake in legislation is to provide adequate information so legislators can draft and consider bills that cover a wide variety of matters, many of interest to escrow holders.

Like an escrow transaction, the California legislature operates with a series of deadlines. Where the escrow product that satisfies clients best is a closed escrow, the product of the legislature is bills, and the deadline for introducing new bills this year is February 18. Some have indicated that 2011 may see the introduction of a fewer number of bills than in recent years. Once those bills are available for review in their initial form, working with your CEA Bill Review Committee we will review each of them and identify those that have the potential to impact the practice of escrow, and we will continue to monitor those bills and others throughout the year.

From a national perspective, even as the Consumer Financial Protection Bureau continues to gear up for implementation as early as July of a vast array of new requirements, including RESPA oversight, Congress has already seen efforts to repeal the Dodd-Frank Act of 2010. CEA has recently been involved in both initial and ongoing conversations with CFPB representatives, explaining in painstaking detail the role of the escrow practitioner in California and the variety of attendant transactions, procedures and regulations.

Over the years, CEA has provided factual and detailed information on behalf of escrow practitioners throughout California on literally hundreds of issues in the legislature and with regulators. Matters regarding property transfers, tax withholding, notary procedures, contractual assessments, loan modifications, short sales and foreclosures are just some that come regularly before the legislature for consideration. In 2010 alone, CEA followed and provided input on nearly 100 bills that had the potential to affect the escrow process in California, and your collective escrow voices were heard. Additionally, because of the collaborative efforts of CEA members, your Sacramento legislative team and in some cases, colleagues in allied industries, escrow holders were not forced to their detriment to process tax credit applications for the Franchise Tax Board and were able to participate, to the benefit of escrow holders, in the development of a less cumbersome Preliminary Change of Ownership form.

Given continued economic challenges and their effects on escrow practitioners, CEA well understands difficulties in paying dues and maintaining association memberships. In spite of, and perhaps because of this, what legislators will do this year can really affect the practice of escrow at both the state and federal level. Your membership in CEA makes a difference. Perhaps even more now than in better times, it is critical that members remain involved to protect the proper role of escrow in real estate transactions.

Michael D. Belote, Esq.
California Advocates, Inc., Sacramento