Comments on: Builders Sue HUD Over New Home Incentives Rule

By: Josh Ferris

Josh Ferris — Thu, 07 Jan 2010 00:18:22 +0000

Hey Jim,

HUD withdrew the rule regarding affiliated businesses: http://www.hud.gov/news/release.cfm?content=pr09-058.cfm

By: JIm Rokas

JIm Rokas — Wed, 06 Jan 2010 20:12:12 +0000

Josh, whatever happened to this legislation?

By: Hey America, Take Another One For The Team: HVCC Fallout Begins

Hey America, Take Another One For The Team: HVCC Fallout Begins — Fri, 19 Jun 2009 19:36:12 +0000

[...] into a series of plot twists that completely change the story as you know it. First we started with HUD trying to protect consumers from unfair incentives tied to a builder’s financial affiliates. We all saw how well that worked out. Then we saw [...]

By: Is HUD Caving In To Home Builder Demands?

Is HUD Caving In To Home Builder Demands? — Thu, 12 Mar 2009 01:39:06 +0000

[...] January 2009 the NAHB (National Association of Homebuilders) filed an injunction against HUD’s revised affiliated business provision in RESPA which would prohibit home builders from offering incentives to buyers that require the use of [...]

By: Derek Weeks

Derek Weeks — Tue, 20 Jan 2009 19:34:50 +0000

This is a great discussion, great post as well.

One thing that has not been talked about is that one of the major reasons builders require buyers to use their lender is that the builder owns the mortgage brokerage and the title company. They make a big percent of the incentive back with fees and costs this way.

I think it is rediculous how builders and now many banks are using this tactic, especially with all of the issues currently in the mortgage market. Consumers should be able to choose who they want for their lending needs, just as they can choose where they buy their groceries and clothes.

By: Chandler Real Estate

Chandler Real Estate — Thu, 15 Jan 2009 15:29:56 +0000

It’s been my experience that the incentives and tie-in to the builders’ preferred lenders have been two-fold. First, the incentive can be impressive on the front end. However, there is an added cost to the loan on the backend to the tune of 2-3% origination. So, the incentive’s net value gets reduced substantially. Sometimes the lenders’ rates are higher as well through the builder.

When I have seen a builder require a preferred lender and that lender is a nationally recognized independent company such as Wells Fargo and others, then I see more competitiveness here and the issue less a concern.

An incentive should remain a true incentive. To do so otherwise is misleading advertising in my opinion and so I welcome the proposed change to RESPA.

David Lorti

By: Eric Bramlett

Eric Bramlett — Thu, 15 Jan 2009 01:57:47 +0000

Richard –

I heartily disagree with you. Builders co/op marketing expenses with lenders, and in return, tie incentives to that lender. It’s anti-competition, and in my opinion, should be illegal.

If it truly is about getting the job done, then build in harsh penalties to the buyer and/or for not closing on time. In Austin, Lennar will often penalize the buyers’ agent by taking away any bonuses if the property doesn’t close on time. Pretty effective.

By: Richard Stabile

Richard Stabile — Thu, 15 Jan 2009 01:39:36 +0000

I am a builder and Realtor. I believe that if a builder is using their money to create an incentive to buy, the buyer and their attorney can evaluate that it is what it is proported to be. I agree, the builder wants to have people to move the transaction who are tune to what is being done. I have found that many time when thing are left to a lender who is not set up for the specialties things,the loan will either not get done or have alot of kinks in it.

Richard

By: Jessica - real estate license

Jessica - real estate license — Tue, 13 Jan 2009 22:10:31 +0000

The incentives have always acted the opposite for me, meaning they tend to turn me off on purchasing, not just in real estate but anything for that matter. I usually get the feeling that if a company is trying to sway your decision to purchase, it is because their product lacks something that they are trying to make up for.

With all of that being said, I know that there are several builders here in my area that are offering 5 year guarantees on weather proofing, free hvac systems and so on. Apparently, people enjoy these types of offers because these builders seem to fill up their neighborhoods rather quickly.

By: Jim Boyer

Jim Boyer — Tue, 13 Jan 2009 21:04:51 +0000

I agree with Carolyn as well. I see these incentives tied to using the builders lender as being bad for the the public and possibly bad for the buyer as well. There is to much opportunity for bad appraisals, and pushing people into getting mortgages which in the long run the buyer cannot afford. If the builder wants to give incentives, be upfront with them, and take them off he price of the home with out any catches.