Builder Incentive to use "Their Lender"

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There has been rumors that builder’s will no longer be allowed to state in their contract, if the buyer chooses the builder’s preferred lender the builder will pay an incentive (1% of closing, title policy, survey, etc.) This is extreme steering, if you ask me. The incentive amount is already worked in the price of the home. I have had so many clients tell me that they would prefer my business (lower rate and closing costs) however the builder would not pay any of the closing cost if the buyer chooses another lender. Let’s be real for a moment, the average 1-2% that the lenders make off the loan doesn’t come close to the cost of covering the origination, title policy and survey. This is steering in its truest form. I am all about competition and more so on customer service. This “New Day” for lender’s is all about an even playing field with higher standards. Take away the so called incentive and let’s see how long the builder’s preferred lender will last, at the very least we could save the buyer’s a little $$ off the price of the home by stopping the inflated price for this so called incentive Can someone clarify is this is just a rumor?


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CFPB has indicated they are not overly concerned with builder/lender joint ventures. I agree with your conclusion that builders do not steer buyers to their JV’s solely due to altruistic attitudes. Sadly, our opinions don’t really matter here.

Answered over 1 year ago
Ted Rood
1344 6

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