Tuesday, June 27, 2006

Buyers and builder's lender

Knock on wood, I've never personally observed a problem regarding the above but just saw a blurb in Sunday's Trib. and thought I'd post something.

The gist of the scenario is these builders try to control the whole real estate transaction from building to title company to mortgage company. And obviously if you're under contract, you've chosen to buy their property and in IL Seller does typically choose title company.

The third area, though, mortgage, is where the article mentioned problems with consumers feeling compelled to use a builder's hand-picked mortgage company. But RESPA clearly requires that any incentives related to such deals be legitimate and not built into the price of the house or the cost of the loan. In other words, builders can't tempt you with illusory benefits, alleged discounts that you're actually paying for somewhere else. Just beware!!

The article mentioned a couple of horrer stories where a builder threatened to retain earnest money when buyers tried to change lenders to a lender not the builders. Also mentioned was a buyer well into a deal with a builder who then was told that her credit history only qualified for a high-cost interest-rate package. If you smell a rat, get the feds, either HUD or FTC involved ASAP!

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