The TRUTH About In-House Lending. - 06.09.10
Today's Poll: Did you know the rules of in house lending?
A. Yes, completely.
B. I knew some, but not all.
C. I wasn't aware of most of this.
D. I'm not going to lie, I knew none of it.
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YvonneEngelbrecht: (June 11, 2010 7:58am)
Buyers Equity Fund works directly with new home builders, mortgage brokers, real estate agents and homebuyers so we have been hit from all angles with this. We have found that 80% of lenders use the clearinghouses for appraisers, but that meant that 20% did not. We went out to find the lenders that only used local appraisers and asked them for names of mortgage brokers they use. That way, we had a list to give consumers of lenders that used local appraisers - They are free to use whomever they wish outside of the list as well. It just helps to be prepared instead of waiting for some appraier 300 miles away to provide an appraisal 7% - 10% below the local market values. Help with additional lenders that use local appraisers would be appreciated as well - please post some if you know of more.
5pence: (June 10, 2010 3:18pm)
They are going to vote on it title by title. Subtitle E is mortgage serviing (you LO's and brokers might be interested in weighing in on that and Subtitle F is all about AMC's and appraisers. If they go through it alphabetically, the last 2 days should be about us. I deduced this from a quick perusal, you should look for yourselves to see what matters most to you and, and and... did I already say it yet? BE HEARD !!! Thanks
5pence: (June 10, 2010 2:46pm)
The bill they have is a conglomeration of both bills but Frank just said that the whole thing does not stand as is and could be wholly amended. They are meeting next Tuesday to start of the final form of the bill and will meet for 6-7 days. We need to lay it on thick with calls and e-mails to be sure we are heard and concerns addressed as our concerns are for the health of this nation and not for a continuation of bailouts. Fannie and Freddie must be dealt with and the HVCC must be exposed as the piece of chit it is. Thank you
5pence: (June 10, 2010 2:33pm)
There is no compromise bill yet, that's what they're discussing on CSPAN 3 - the compromise bill. They're going to go through it title by title for 6 to 7 days, all on TV. I would strongly suggest that you contact your representatives during the next 6-7 days so that HVCC can be sunsetted as it's illegal!! Call (866) 544-7573 to be connected to your Senators. I'll get a number for the House reps in the next day or 2 and post it here. Now is the time to not give up - be heard !! End the HVCC - it greatly harms consumers!!
cgappraisals: (June 10, 2010 1:27pm)
Just got done reading the compromise bill. Report on HVCC effect is now 90 days not 60. Just in time for it to dissapear in November, then will see what it did to us. Nice timeing! A little to late for alot of us who are now below poverty line. Section 4 of the Real Estate Settlement Procedures 5 Act of 1974 is amended by adding at the end the following new subsection: ‘‘(c) The standard form described in subsection (a)shall include, in the case of an appraisal coordinated by an appraisal management company (as such term is defined in section 1121(11) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C 12 3350(11))), a clear disclosure of—‘‘(1) the fee paid directly to the appraiser by such company; and ‘‘(2) the administration fee charged by such company.’’. Now maybe the robbers can't hide.
D-appraiser: (June 10, 2010 1:07pm)
Everything is about money. They "legally" stolled money from apprasers with HVCC....... and they will continue to do so... Nobody can stop them! Consumer protection? Main Street? ... those are electoral jokes!
5pence: (June 10, 2010 12:54pm)
I'm watching Cspan 3 and it's the meeting of the Senate and House to merge the 2 bills. Freakin Barney Frank is busy defending his own positions instead of getting down to business. Somebody shut the guy up, please, Just get the job done in the best interest of the people and not the banks. No more showboating - gawd
rlittlefield: (June 10, 2010 12:03pm)
Here is a quote for HUD regarding working as a real estate agent. "They may have other employment including self employment.However, such outside employment may not be in mortgage lending, real estate, or a related field" Notice it says that It clearly says that loan officer can sell real estate as long as it is for the same employer.
5pence: (June 10, 2010 12:02pm)
I'm really sick of this lobbying crap, there's right and wrong and that is not supposed to be bought but readily apparent to all and immutable. Why should we have to lobby for what's logical, sensible and right? It's crazy that the truth and right and wrong can be bought. These politicians are in a box and listen only to their handling banksters. I guess I'm naive, I thought the government was here to protect the consumer and the public.
D-appraiser: (June 10, 2010 11:59am)
Again, big banks win!
5pence: (June 10, 2010 11:54am)
Ok about 8.5 years and not 10. Thanks D-appraiser, I'm looking it over now. The language shows that they are wanting to blame appraisers for "making" market value and inflating values that contributed to the bust. They really have no clue, we don't "make" market value
ssfranny: (June 10, 2010 11:48am)
There is language in Financial Bill thats puts clamps down on AMCs. Gee real suprising that HVCC was not included. Gotta love the bank/AMC lobbies. I had heard from someone that HVCC was being ended in Nov? I read that in Senate bill where they wer going to propose a "study" to see the effects of HVCC on small businesses AKA brokers. Its screwing everyone but funny thing is if you're a Mortgage Banker with own AMC you can dictate what appraisers are in your AMC. Appraiser associations need to lobby more in DC.
5pence: (June 10, 2010 11:48am)
ssfranny - there's supposedly 103 months of unsold inventory out there, including foreclosures. Almost 10 years !! Builders need to find another trade, the last thing we need is more inventory. JMHO
D-appraiser: (June 10, 2010 11:46am)
Here you go: http://msnbcmedia.msn.com/i/CNBC/Sections/News_And_Analysis/_News/__EDIT%20Englewood%20Cliffs/BaseText.pdf
5pence: (June 10, 2010 11:45am)
D-appraiser, do you have a link to the compromise bill?
ssfranny: (June 10, 2010 11:44am)
We have here in Omaha one of the bigger builders whos in bed with Met Life retail. They do same thing you only get closing costs paid if you go with them for a loan. Also First Mortgage Corp is one of the most blatant. They pay for advertising, closing costs whatever they can do to pay for business. Why they've not been hammered by HUD is beyond me. Easy way to sell customer on in house lender. Show them what they're paying extra in payment over 360 months for that $2000 they save in closing costs. On a 100,000 loan .375% diff in rate is about $35 a month in payment. Even over 10 years that amounts to $4200 they overpaid. Many biulders are going out of business here in my town since they severely overbiult 3-5 years ago. I heard of 2 owners of a builder recently take their own lives. I don't think builders are doing as well as people think.
5pence: (June 10, 2010 11:43am)
A Study??!! Are they fkn insane?!! What was supposed to be in there was sunset the HVCC and THEN do the study, ie.. put it through due process of law to make sure it doesn't hurt the consumer or small business. Basturds, it's illegal you stupid fks. It's supposed to sunset on it's own in November - maybe they'll let it sunset
D-appraiser: (June 10, 2010 11:41am)
TAVMA lobbylist... We are stuck with HVCC.... AMC's will dictate de business. I refuse to do work for them.
joecolorado: (June 10, 2010 11:34am)
which means that more money is getting funneled out to the group that will be the investigators. Who would have thunk it? Wonder which member is going to be on THAT panel!!!!
joecolorado: (June 10, 2010 11:32am)
a STUDY!!!!! I wonder who is pulling the strings on that recommendation.
joecolorado: (June 10, 2010 11:31am)
Lets see what happens when the Institutes and societies connected with appraisers start to lose long time appraiser members.I wont promote the ASA anymore due to their indifference about HVCC and amc fiasco.The AI also has a similar outlook and will get similar treatment from me. BUT just say no to bad appraisals,report the offender to the State and complain to the AG of your state if there is pressure from amcs.
D-appraiser: (June 10, 2010 11:31am)
House-Senate compromise bill on financial reform just released. HVCC will not be terminated. They require a STUDY!!!!!!!!!
D-appraiser: (June 10, 2010 11:31am)
House-Senate compromise bill on financial reform just released. HVCC will not be terminated. They require a STUDY!!!!!!!!!
D-appraiser: (June 10, 2010 11:30am)
House-Senate compromise bill on financial reform just released. HVCC will not be terminated. They require a STUDY!!!!!!!!!
joecolorado: (June 10, 2010 11:27am)
There is no substitute for a good appraiser,unfortunately the amcs dont use or need good appraisers when there are cheap assed inexperienced wimpy appraisers out there that do not care about what they are doing.The only avenue you have is complain to the State.I sound repetitious,BUT until you guys that are directly affected by bad appraisals get in the State's face about the quality of amc appraisers,nothing is going to happen.As an appraiser I am embarrassed about the present standard of others reports,the amc appraisers fill a need as they fill out the form,there is no respect for the business,no expectations of longevity,no loyalty and certainly no money.The amc bandwagon has ensured the demise of this once fantastic profession.I received my membership fee reminder from the ASA today and sent them back a note telling them to shelve my membership as I dont have the additional capital to invest in their system which does nothing for,or to,protect appraisers.Lets see what happens
5pence: (June 10, 2010 10:49am)
Turn those appraisals in to the state boards. It's the only option. Hopefully your state will do something and skippy will be out of a job.
5pence: (June 10, 2010 10:46am)
See, the AMC's know what they're doing is illegal but they also know there's no one to complain to. They are deconstructing the appraisal profession to the level they can understand - and that level is AVM's. I had an appraisal where the Fed identified the area as a declining value market. Partly true. There are pockets of areas that were declining and areas that were stable and some that were even appreciating in value. The AMC's sees the market identified as "declining" and they illegally force skippy appraisers to reflect that in their valuations whether it's true or not. They won't pay for and use the most competent appraisers because their collective limited intelligence could not deal with a real professional. They know there's no where to complain and take full advantage of it and the consumer. The HVCC is illegal and harmful despite the claims of those in a fog of complacency about it that say it just needs some tweaks.
5pence: (June 10, 2010 10:45am)
See, the AMC's know what they're doing is illegal but they also know there's no one to complain to. They are deconstructing the appraisal profession to the level they can understand - and that level is AVM's. I had an appraisal where the Fed identified the area as a declining value market. Partly true. There are pockets of areas that were declining and areas that were stable and some that were even appreciating in value. The AMC's sees the market identified as "declining" and they illegally force skippy appraisers to reflect that in their valuations whether it's true or not. They won't pay for and use the most competent appraisers because their collective limited intelligence could not deal with a real professional. They know there's no where to complain and take full advantage of it and the consumer. The HVCC is illegal and harmful despite the claims of those in a fog of complacency about it that say it just needs some tweaks.
5pence: (June 10, 2010 10:37am)
RealPro: Researching appraisal boards over the last year it has become overwhelmingly apparent that AMC's are using low paid & educated appraisers they can manipulate to put whatever they want in the report. They are forcing the skippy (gutless) appraisers to use REO, foreclosures & short sales whether there might be a need to or not-as if they know the market better than the appraiser! AMC's, if they did nothing it would not look like they're fighting fraud to outsiders & they are ALL about appearances. So they force lowball valuations to make it appear like they're worth their useless existance. See, they are not appraisers and know little about the profession so they use the least educated appraisers they can find to manipulate. 2. It's been suggested that AMC's are also forcing low valuations because they don't want to be responsible for the borrower getting off paying mortgage insurance. Re-fi's to get rid of MI are nearly always low and an exercise in futility for the consumer.
RealPro: (June 10, 2010 10:21am)
Appraisers opinion welcomed! I'm a realtor of 33 years, and never seen so many appraisals coming 20-30,000 low in my life! I'm in the Phoenix AZ area, and have appraisal killing deals at prices that no buyer can find on the MLS.My properties are being marketed correctly and selling in less than25 days in a 90 day market. Question... Has there been a recent rule change that has require appraisers to use so many Trust Deed Sales in the comparables? This will kill Phoenix's real estate market if appraisal keep coming in lower than anything on the market.
pilotman48: (June 10, 2010 7:07am)
Closing another Bank of America REO tomorow. In 2 cases this year, the Buyer is told if you finance through BoA they will pay for the appraisal. The property is actually titled BAC a subsidiary of BoA. My customers did not use BoA so I'm not sure how it shows up on the HUD. Does the seller pay for it or the lender or is it given back as a credit? In any case it's a ripoff and should be illeagal
5pence: (June 09, 2010 7:45pm)
You don't see us vacationing in China do you? They take financial crimes seriously. (They execute financial criminals). We stay in friendly territory. "Investigations" and "financial reform" are designed to feed sensational--but harmless--content to the media. They love us! We've bought most of Congress, the SEC crafts lame complaints, the entire regulatory system is captured, rating agencies are in our pocket, the FBI's budget is a joke, and the Department of Justice can't seem to remember its purpose. We cratered the economy and got the financial equivalent of a traffic ticket. This has left us free to make a mockery of traditional banking and ramp up global systemic risk. We're rolling in more cash than ever before.
5pence: (June 09, 2010 7:43pm)
We pillaged entire neighborhoods driving millions into bankruptcy. We destroyed families and drove a few of our victims to suicide. As for lack of remorse, we've even propagated what Elizabeth Warren calls the "myth of the immoral debtor." We excel at shifting blame and kicking our victims when they're down. Fortunately for us, we devastated the finances of the least powerful people. The public outcry from our victims has been successfully muted.
5pence: (June 09, 2010 7:41pm)
We are really big on extortion, and we know how to keep milking our victims. We threatened our government that the financial system would collapse, if it allowed shareholders to be wiped out and debt holders to accept debt for equity swaps. We had our government eating out of our hands, begging us to take hundred of billions in TARP money, and hundreds of billions more in back-door bailouts and ongoing Fed subsidies. We deflected some blame to Fannie and Freddie, even though most of the problematic subprime mortgages were fueled by money raised from our private securitizations. We got Congress to pressure Fannie and Freddie to lower their standards and buy hundreds of millions of our "AAA" rot. After our Ponzi schemes unraveled, they were forced to pick up the slack. Meanwhile, we make money hand-over-fist funded by our victims, U.S. taxpayers. We pillaged entire neighborhoods driving millions into bankruptcy. We destroyed families and drove a few of our victims to suicide. As for l
5pence: (June 09, 2010 6:15pm)
States don't have enough money for enforcement but they will do what they can about that appraiser. Thing is there should be a place to complain and get action at the Federal level for administrative arms of the Federal government and their policies that are hurting consumers - but there is none. Conveniently overlooked for the banks benefit - more bailout. Fiscal and total incompetence bailouts. I'd say they're almost equally costly to the health of this nation.
Owl Tree: (June 09, 2010 5:58pm)
Joe....don't worry, I made sure to escalate this. And my client is a smart guy; he understands the situation, and plans to file a complaint after closing. Unfortunately, what should have been a glass slipper deal is now completely sideways, and as you guys know, the originator essentially owns everything that happens from application through closing. And please, excuse my language in that previous post.
5pence: (June 09, 2010 5:12pm)
I mean, look at what it's costing the consumer, fee upon added fee and this one even personally covering, out of pocket, the split to seal the deal. No where to complain. Wrong, wrong, wrong
5pence: (June 09, 2010 5:06pm)
Perfect example of why the HVCC is illegal - no consumer protection and no where to complain. The use of sub-par appraisers sure gives brokers (that don't know better) many reasons to hate appraisers - in that case the banksters/AMC's are winning in their fight to replace appraisers with AVM's. Sure makes brokers look bad too to their local clients. Finding another appraiser to finish the 442 should have been done before the dispatcher called you. AMC incompetence, fkn retards. You're completely at the mercy of the AMC and they have no mercy. Insist they find another appraiser yesterday to do the final inspection or you'll be using other companies next time! Think that will scare them? Probably not when they have a lock on business thanks to Cuomo the putz. I really feel sorry for you guys, having to put your livelihoods and local reputations on appraisers that work for beer money.
joecolorado: (June 09, 2010 4:29pm)
Owl-REPORT the appraiser to the State if there is an issue.Don't let it slide and tell the appaiser what is happening and why.We need to get rid of dimwits like this out of our profession.It may be too little too late,but damn it, This is just getting more and more worse.
Owl Tree: (June 09, 2010 3:48pm)
HVCC Horror Story.....sent purchase to a 2Big2Fail Wholesale Division. Appraiser assigned to someone outside market area. Appraiser botches report (inaccuracies, ommissions, etc). Value appeal gets halfway between original sales price and appraised value. Angry purchasers comes out of pocket for difference. Appraiser assigned final inspection report last week. Final inspection due back today. Loan is supposed to close Friday. All conditions cleared subject to final inspection. 2Big2Fail Appraisal Department Dispatcher calls me to say the appraiser won't be able to do the report for unspecified reasons. I'm guessing it because of hurt feeling over my appeal, but since I'm blacked out of the process, that's just a guess. Now, my closing is likely going to get pushed back while they scramble to find a new appraiser to complete the report. Nice job, Andrew Cuomo....you fucking prick.
zoolander: (June 09, 2010 1:47pm)
I agree with Nuke 'em. The problem is the punishment will never level the playing field. Those LO's have gotten rich many times over thanks to unenforced RESPA rules. Their ad budgets after making $60,000 per month for years will blow the rest of us out of the water. Also, their relationships with builders and realtors that they've known for years now are nearly impenetrable. By the way, what realtor doesn't want to opportunity to work with an LO who has a database of 10,000 past clients? Hopefully, the enforcement of RESPA laws will benefit future generations who are committed to ethical business practices. But the rest of us are still screwed.
Nuke 'em Until They Glow and Shoot them In the Dark: (June 09, 2010 12:49pm)
A lot of Real Estate Brokers that Own RE Brokerages AND Mortgage Brokerage/Bank Branch figure out all sorts of clever ways including Giving their RE Agents higher splits for sending business through their company that is either in a family member's name or through clever Concealment like a Russian Nesting Dolls. Officially they don't own the business but as a RE Agent if you don't Use their In-house lender then your RE Commission takes a Hit. So If it walks like a RESPA violation and quacks like a RESPA violation it should be a RESPA violation. They should go after these situations like white on rice and eliminate them because they are very anti-consumer. This and builder lenders covered yesterday are last vestiges of organized scumbaggery in the industry and it's tome to stamp out these scumbag Roaches.
msmammypie: (June 09, 2010 11:00am)
Nice haircut, Frank! S-E-P-A-R-A-T-E. Great info, as always!!
ptaylor: (June 09, 2010 10:14am)
In answer to the LasVegas remarks, here in Texas the builders tie their incentives to using their Lender and the interest rate is always higher. The buyer can't have the upgrades and not use their Lender. I can understand that the Builder wants good service, but also the Broker doing the loan wants to give good service because that results in more referrals. The old days and ways of poor service have flown with the downturn in the economy so the excuse of service won't overcome the intent of the RESPA law.
vegasrealestate: (June 09, 2010 9:37am)
Most builders offer closing cost incentives which are tied to a lender, although some offer free upgrades as well. Builders don't use a preferred lender strictly for profit. In most cases they feel that their lender offers superior service, (loan application, appraisal and closing). That's the main reason for working with a preferred lender. Buyers always have the right to decide if they would prefer to receive a potentially lower interest rate from another lender (paying their own closing costs) or receive a slightly higher rate from the preferred lender (who will pay their closing costs). If you mortgage brokers/lenders really want "to earn" the buyer's business, then offer that low rate to your buyers and pay their closing costs. Then the buyer wouldn't need the builder's lender. Lenders don't do that for one simple reason: you can't make enough profit at the lower rate while paying the buyer's closing costs. It's the same business decision that builder's are making: profits.
5pence: (June 09, 2010 9:32am)
I should go, I don't think I'm making a lot of friends here lol. Have a good day! You too joecolorado
5pence: (June 09, 2010 9:30am)
I'm also not saying that all builders are shysters, but 90% I've known are. Usually the larger builders are the worst. Hey, how do you think they got that big. JMHO
GODLIKE: (June 09, 2010 9:13am)
You'd think that I didn't like builders but I'd much rather work with a builder than a Realtor. The builders issues are upfront and out in the open, a Realtor on the other hand has issues that only his/her psychiatrist can diagnose and no one knows what misconception will crop up and when so you can't prepare for a Realtor's idiocy. We only work with good Realtors that we find by working a deal with them thru one of our builders.
GODLIKE: (June 09, 2010 9:10am)
Gee, you guys have got me all worked up and now I have to go out and call on a bunch of my builders. That should go well.
GODLIKE: (June 09, 2010 9:09am)
The builders operate like car salesmen. Notice you hardly ever see a price of a car anymore, you only see what the payment would be. The $25-$30 difference in a house payment that's sometime in the future isn't as hard to do as the cash out of pocket today.
GODLIKE: (June 09, 2010 9:07am)
MortgageBanker and SharP there is nothing that says EVERY builder in the whole US of A operates to the detriment of the consumer, but the preponderance of evidence says that most do. You 2 might work for the only 2 builders with a soul and that's cool, but the info as presented and testified to by multiple people is the way MOST of the builders operate. Those are the people that need to be stopped. And out of pocket expenses always trump potential future expenses.
5pence: (June 09, 2010 9:05am)
These builder use sleight of hand known as incentives as the typical purchaser only sees the monthly payments and doesn't really care about the sales price as long as the monthly payments are affordable (this is a proven fact). Builders exploit this market perception to get a higher price per unit - the buyer is oblivious that they're being taken and it appears to be fair play as according to the terms of market value, both parties are happy with the transaction. The appraiser shouldn't be as inflated values are no ones friend, as we've seen lately.
WashingtonRealtor: (June 09, 2010 9:03am)
1. If you have a R.E. license you can not even be in the same room. 2. Builders usually refer to the BANK (s) that gave them the $$ to build... we lend with strings. 3. Frank should plead the 5th ! 4. Yea, you don't have to buy this house... is missing the whole point, Sellers (builders) in bed with the BUYERS (bank) looking for the $$ back... more subtile, a lower rate on the next spec home ? Prove that.
GODLIKE: (June 09, 2010 9:02am)
So MortgageBanker none of the rest of us who deal with builders everyday and who have also been the builder's lender know anything because it doesn't agree with your prejudices?
Jakeb7555: (June 09, 2010 8:58am)
I think it’s ridiculous that FHA/HUD doesn’t allow for someone to do an FHA loan and be licensed as a Realtor. As long as you’re not double dipping on the same deal, what’s the harm? If anything, you have someone working for you who is more competent and knows both sides of the transaction.
5pence: (June 09, 2010 8:56am)
Around here 3% concession is typical. If the builder is offering incentives that amount to over that 3% concessions then they need to be adjusted for. If 1 buyer is getting nothing in the sales price except that 3% seller concession, then that is it's sales price and most likely, market value. If the price is jacked up $35k over that example and the improvements don't add up to $35k or they don't get dollar for dollar in the market comps, then someone is taking someone and it won't be me. If financing is being bought down by the builder as an incentive, then that also is a seller concession and needs to be reflected in the value. It sometimes seems like builders take great delight in confusing the terms so that the appraiser can't make sense of it and values it at the inflated price. That appraiser isn't doing their job.
MortgageBanker: (June 09, 2010 8:56am)
@SharP - Finally! Someone with a factual answer about builder owned mortgage companies. I agree…if you didn't have competitive rates and fees along with convenience and great customer service you would not be able to get the business. For Frank & the video this morning to say that builder Account Managers do not earn their business is completely misguided.
joecolorado: (June 09, 2010 8:50am)
There is no incentive to buy a home at an inflated cost(where the buyer has the additional sum to consider of paying for the closing costs included in the cost of buying the atypical home) when there is a perfectly good substitute available in a directly competing subdivision(which IS typical),where the builder behaves in a typical manner by paying the closing costs.
joecolorado: (June 09, 2010 8:46am)
Builders are just like everyone else,they like to make as much of a profit from their endeavors as everyone else.When they wont pick up the closing costs it means more profit for them,fine,I have no problem with that,but where its typical in the market to pick up the closing costs for the sales price being offered by the builder,then there is an adjustment that needs to be considered by the appraiser.If the builder doesn't drop his/her sales price to what is typical for the market when not picking up the closing costs(if they are typical),then the adjustment to be made is that additional sum or profit being made by the builder which s/he would not normally get.Again, its equalization and substitution,what would a typical buyer purchase if this home was not available.
celloshred: (June 09, 2010 8:43am)
What about ABA relationships? How do First Mortgage/Prospect/etc. operate in large RE offices?
SharP: (June 09, 2010 8:43am)
GODLIKE, I have never been asked to pay for the title policy. The builder pays it.
joecolorado: (June 09, 2010 8:37am)
HVCC wont get rid of the appraiser in the builder's pocket.The rules against this type of influencing were in place long before HVCC.The appraisers need to be strong enough to stand up to external pressure to make a value.Thats all that is needed,nothing more.The advent of HVCC has not alleviated that problem,it may have made it worse,now strong appraisers are being forced out by amcs, with amcs using low appraisal fees.Weak appraisers that didnt get work prior to HVCC as they were easily manipulated now are getting work as they are cheap.What a mess.....
jcollins: (June 09, 2010 8:37am)
edtheloanguy,,, I asked HUD and the DRE about the Builder requiring the use of a particular lender w/ incentives. They said because the buyer does not have to buy the house. there is no issues. They did say that any seller can make the same restrictions. They just can not discriminate.
GODLIKE: (June 09, 2010 8:35am)
When a builder says "I can't afford to pay the buyers closing costs, sod the yard, put in a fence, or whatever because I can't make any money back from you", then that's proof the buyer's getting it up the ying yang.
GODLIKE: (June 09, 2010 8:31am)
SharP when the builder says "All my lenders have to agree to pay for the title policy" that's .125-.25% right there.
edtheloanguy: (June 09, 2010 8:30am)
Everyone is right, that incentives to the buyer are not illegal. The problem comes in when the incentives are tied to a specific company. Agents, try this on your next listing, have your seller offer $10,000 in closing costs, then write "Closing costs are only valid if the buyers uses Bank of America for their financing". Any guesses on how that would go over??? It shouldn't be any different for the builder. Every loan I have lost to the "builder incentive" game, I could easily have gotten my clients a better deal with those same incentives. Everyone needs to be held to the same standards on all sides, I'm tired of the rules coming down hard on brokers and agents, but letting builders and banks slide.
joecolorado: (June 09, 2010 8:30am)
Appraisers that do not adjust for concessions in these types of builder contracts are not doing their job.That is part of our problem.....lazy easily influenced inexperienced appraisers ... freebies,gifts,sales concessions,vacation packages,cars etc given as an incentive where comparable properties in directly competing subdivisions do not have similar concessions need to be adjusted to accommodate the concession which is superfluous to the market.A comparable property isn't one which was sold by the same builder,(what would happen if the builder gave the property away for $100 or free?for example)its the principle of substitution appraisers must consider.Substitution in this case is for directly competing subdivisions,not just sales within the same subdivision,we have to look at the entire market area not just one pocket of sales.All things must be equal.
jcollins: (June 09, 2010 8:22am)
SharP,,, Is that because of the incentives?? I think it is great that you were in the market. I have ran up against many builders and with the incentives could not beat them. But, what I would tell my clients is take the incentive and I will refi you right away. Many times for no costs. That is how much higher the builders lender was. The clients wins both ways.
jcollins: (June 09, 2010 8:17am)
Regarding Builders and the dollar for dollar upgrades on the appraisals. I wonder if that will be going away. with HVCC they can no longer have the appraiser in their pocket either. Has anyone ran into this yet?
jcollins: (June 09, 2010 7:59am)
If a builder just gives incentives to the buyer to use a particular lender. Not against the rules. Normal Seller's can do the same thing. If you are selling something you can make it part of the contract. The buyer has the right not to buy under those rules. Once the lender pays for more then their normal share of anything then that is where they are at fault.
SharP: (June 09, 2010 7:52am)
GODLIKE, I work for a builder in Utah. If my rates were to be .25% to .375% higher, I simply would not get the business.
Yo-YoLoan: (June 09, 2010 7:46am)
What about those ABA's like Keller, and WElls and Tarbell have with loan companies. Where they tell agents, if you send your loans here hou get profit sharing from that??? is sooo shady!
janneintx: (June 09, 2010 7:45am)
Guys, guys, guys. Who does your proofreading? Seperate? Seriously?
GODLIKE: (June 09, 2010 7:43am)
SharP what builder are you working for? A national company or an itty bitty company? I deal with virtually all the major builders (maybe not every subdivision) in the DFW area and .25 to .375 higher rate is the norm.
GODLIKE: (June 09, 2010 7:38am)
Thanx for going over this again today. It is an issue I deal with daily and there is no way, shape or form or this that doesn't boil down to money to the builder as the root purpose of the arrangement. The consumer gets screwed no matter how you slice it. I too have been the in-house lender for a Realtor and you hit the nail on the head, it's tough to work when the Realtor is all over you all the time and you definitely won't get business from another company. I wouldn't do that again even if the RE company paid me.
Tom: (June 09, 2010 7:36am)
Thanks for the info guys...but can a Realtor that is also a licensed LO work for a mortgage company doing conventional and/or FHA loans while working for a Real Estate office doing real estate?
5pence: (June 09, 2010 7:31am)
This is off-topic, but if anyone is interested in the derivatives holdings of the banksters. The 5 biggest Wall St banks are bankrupt at least 10 times over and as much as 50 times over! "Off-Balance-Sheet" for 5 largest Banks ranges from $32 Trillion - $82 Trillion “Off-Balance-Sheet” Toxic Derivatives according to 0ffice of Comptroller of Currency, 0CC, quarterly Report: 1 JPM0RGAN $81 TRILLION in Toxic Derivatives 2 BofA $78 TRILLION 3 G0LDMAN $48 TRILLION 4 M0RGAN $39 TRILLION 5 C1T1GROUP $32 TRILLION http://www.occ.gov/ftp/release/2009-72a.pdf . ... Also off-topic, Sen McConnell just stated that the Kerry-Lieberman bill for oil regulation was most written by BP! Can anyone say that the Consumer Protection bill wasn't mostly written by the banksters? What are we paying these politicians for - to hire those they're supposed to protect us against to write the new laws??!! They think we're idiots. Vote out everyone that voted for TARP and the bailouts without reading the bills.
SharP: (June 09, 2010 7:31am)
I happen to work for an In-House Lender for a builder. The complaints I am hearing that the borrower gets "screwed" because they get a higher interest rate, simply are untrue, at least with me. We encourage our borrowers to get GFE's and lets compare. In the 7 years that I have done loans for this builder I have only had 1 lender that could beat my GFE and rate, and that loan happened to be a loan program that very few people could qualify for. It has been my experience that home buyers are very savvy about rates and what they should be.
STyler: (June 09, 2010 7:11am)
A client of mine submitted an offer on a property asking for some seller paid closing costs. He got a counter offer back stating that closing costs would ONLY be paid if he went with their lender. First time buyer, didn't have the funds to pay all of their own closing costs so guess what, he felt he had no choice but to be forced to go with their lender if he wanted that home. How can that be legal??
mark: (June 09, 2010 6:14am)
Question - what about the Relocation companies. In their agreement with the Realtor, the Realtor, in order to stay on the list of approved realtors, they have to pay to the Relocation Company at kickback of 35% of the Realtors Commission. Why aren't we going after these?
kcf327: (June 09, 2010 6:04am)
What about these web-sites being given to Realtors for their listings ( paid for by lenders)to refer clients to them? By the way, is there a phone # or e-mail address to register complaints against violaters of RESPA? I am sick and tired of this stuff going on and want to raise awareness. Again, if you are involved in the selling or constructing of homes you should be banned from the industry of real estate financing. Is this such a hard concept for our regulators to understand?
frankgaray: (June 09, 2010 6:04am)
Eileen - CB? Not sure what you mean.
DanSchweihs: (June 09, 2010 6:03am)
In future webcasts, you might want to add specific instruction on how to report this abuse, hopefully anonymously report this abuse including the specific phone number of the enforcement agency, etc. Many of these laws are interesting but not enforced. We will need to clean up our own industry and specific instructions would improve the industry.
frankgaray: (June 09, 2010 6:03am)
Maria - HUD is looking into that as well and it is covered in this comment period. So let your voice be heard!
Eileen: (June 09, 2010 5:52am)
How about the CB loan officer offering to pay for the agents business cards if they put the LO's info on the back of their cards. Of course, this is their in-house LO. The latest that I heard is that the borrower can still get the $8,000. tax credit if they aign w/ CB agent!! The only way I figure they are doing this is adding the $8,000. to the sales price and giving it back at settlement. Tea totally illegal!!!!
Dietcoke: (June 09, 2010 5:05am)
Are we also talking about mortgage companies, settlement companies, and builders that are owned by the same company? Incentives are offered to use the mortgage company.
GaryP: (June 09, 2010 4:35am)
The whole builder/lender issue simply highlights the fact that other industry lobbying groups, such as NAHB, are doing a better job, and have more money, to protect their industry. They've sold HUD on the idea that this is simply "bundling" of services and that it benefits the borrower in the long run. We all know better, but no one seems to be listening in DC. I'm sure that the NAHB lobbyists are walking the halls of HUD headquarters right now, explaining how any commens we make are simply those from competitors that are trying to throw dirt on a well oiled system that has benefited their clients for many years.
GaryP: (June 09, 2010 4:29am)
Maria, The Bush HUD has already gone after the builders on the title company issue. However, their enforement action was anemic at best and resulted in basically what amounted to a small fine that was basically just a slap on the wrist. I think the Builder just took the fine and wrote it off as the cost of doing busness and just forced them to refine how they did the "referral" process.
GaryP: (June 09, 2010 4:26am)
I have frequently been put in aposition where I had to explain to a borrower how the whole "insider lender" scam works with builder's and their lenders. It certainly puts me in an uncomformtable position. I hate having to talk negatively about my competition. However, I usually just tell them that it comes down to a matter of paying more in fees now by going with me, or paying more, in the form of higher interest, for the next 30 years. I tell them that there is no such thing as a free lunch. Unfortunately, especially in the case of first time buyers, they are more concerned about closing costs and "incentives" than payments and they end up going with the builder's lender. I can't help but wonder how many end up regretting that decision later on when they try to refi out of that higher rate and find out that those "freebies" have resulted in them being underwater on their appraisal.
maria: (June 09, 2010 4:21am)
What about the violations with Lenders requiring that ONLY a few selected title companies be allowed to close on their REO deals???? Isn't this a RESPA violation? I know its been an issue in California...its rampant in Florida taking alot of business away from the independent title agent...
GaryP: (June 09, 2010 4:18am)
I remember the first loan that another LO did in my office after becoming a "preferred lender" for a builder. He ended up making $14 on the deal after finding out that he was required to pay the owners title policy for the builder. That is how the builders here were geting around the referral kickback rule here in TX. Obviously, the LO hadn't investigated the details of what the rules were going to be for the referrals he was receiving. Wile there was no direct compensation from the LO to the builder, I have always felt that this indirect compensation was pretty iffy from a compliance standpoint. Perhaps HUD is finally coming to the point where they agree.
amecs: (June 09, 2010 3:50am)
I have run into this often, especially builders with their own mortgage company and you get special incentives only if you use them and of course their closing atty. too. Had one deal that the builder REQUIRED that you use their preferred lender. Needless to say they are now bankrupt! But what about lenders that have an "in house" real estate company that they refer their business to who refer their business to Realtors in the location of the borrower? (for which the Realtor pays a 35% split for the referral to the real estate company) Is this a loop hole? or is it compliant?