New Home Buyers Will Soon Be Free To Choose

By
Mortgage and Lending with America's Mortgage LLC

I read an article this last week about the new RESPA changes coming into effect on January 16, 2009 and the revisions to "Required Use" definition will have HUGE implications to new home builders. How so?

Home builders will no longer be allowed to offer special financing or closing cost incentives to their clients if they use their preferred lender. Builders must offer these incentives to every buyer no matter what mortgage company the buyers choose! Yeah!  Builders can no longer require the use of a certain settlement provider such as a mortgage company when offering any discounts or incentives.

Your buyers will soon be free to choose their lender when buying a new home!

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Rainer
31,074
Loren Johnson
White Bear Lake, MN
CMPS

I've been so tired of friends saying they'd "love to use me, but they get 10K in closing costs from the preferred lender"- I can't wait for the field to be leveled again!

Dec 16, 2008 11:20 PM #1
Rainer
207,212
Shane OnullGorman
Eau Claire Realty, Inc. - Eau Claire, WI
Eau Claire Wisconsin, Real Estate Agent & Realtor- Buy or Sell

Its hard to stay on top of all the rules and regs with so many changes.

Dec 16, 2008 11:49 PM #2
Rainmaker
259,789
Mara Hawks
First Realty Auburn - Auburn, AL
Inactive-2012 REALTOR - Homes for Sale Auburn Real Estate, AL

I've never liked this either. I've worked with a builder who has offered wonderful incentives in the past, but NEVER required ahis lender...But other builders in this town make the buyer use a preferred lender. It's always felt so wrong.

Dec 16, 2008 11:53 PM #3
Rainmaker
996,133
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Lonnie:  Although I understand the urge to want to use their own lender... buyers must realize that when they use the builder's lender... the builder does make a profit because of the loan.  If.... IF the buyer does not use the builder's lender, the profit is not there for the builder, which means the builder makes less money.  This is why the builder requires their lender.  So if it is not used, it makes profit sense to not allow closing costs to be paid.  If you cost the seller money... the builder has to balance it out some way.  It only makes sense.

Dec 17, 2008 12:21 AM #4
Rainmaker
996,133
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Loren:  It's simple.  If the buyer uses the builder's lender, the builder profits.  If they use you as their lender, you profit.  You cannot change the rules of the game and still expect the numbers to still be the same.   Nothing is free.

Dec 17, 2008 12:23 AM #5
Rainmaker
996,133
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Lonnie:  As far as a builder requiring the use of a certain settlement provider... you are opening the closing up to all sorts of problems, including higher costs... which in the end, the buyer must pay.

Dec 17, 2008 12:24 AM #6
Rainer
134,328
Mike Michaud
North Texas Help-U-Build - McKinney, TX

The buyer always had the choice.  They could choose the builder's incentives by using their preferred lender, or they could use their own and forego the incentives.

Of course, if you were really up on the numbers that the builder's lender was using, you could show where the 10K in incentives was coming from. 

Juice the rate a .25-.375% over a 30yr and I can get you the same kind of "discount".  

We all know how the game is played.  

 

Dec 17, 2008 12:49 AM #7
Rainmaker
404,246
Richard T. Dolbeare
Keller Williams Realty - Lihue, HI
R(B), ABR, CRS...Hawaii Multi-Island Specialist

I haven't seen those kind of requirements here in Hawaii.  It's a shame if it's been going on elsewhere!

Dec 17, 2008 01:00 AM #8
Rainmaker
296,994
Dan and Amy Schuman
Howard Hanna Real Estate Services - Solon, OH
Luxury Home Specialists

I haven't heard about the new RESPA changes but l like them. I was on the mortgage side of things for 15 years and often had clients who wanted to use me but feared the builder would react negatively if their preferred lender wasn't used. I realize builders are hurting too in this economy but I don't feel bad for them and welcome the new changes.

Dec 17, 2008 07:18 AM #9
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Rainer
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Lonnie Glessner

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