Comments on: Is HUD Caving In To Home Builder Demands? http://ericbramlett.com/hud-caving-home-builder-demands/ Click here to search all Austin real estate for sale! Eric Bramlett is a full service Austin real estate broker specializing in buyer, seller, and investor representation. Mon, 12 Mar 2012 05:56:38 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Cavloverhttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-6371 Cavlover Sat, 29 Aug 2009 17:26:58 +0000 http://www.ericbramlett.com/blog/?p=712#comment-6371 Will...I think you're absolutely right...if I am getting an incentive for working with one of your pre-approved lenders then that's one thing. Our issues rise from the monopoly of being incented to work with a lender and title company that is owned 100% by the builder..if the rates and costs illustrated on the good faith estimates were comparable that would be one thing but in our experiences the builder is getting their incentives and more by charging higher title fees, and points on the loan. Ramblinwreck..I got everything done through the sales rep, didn't need to take it up the ladder anymore and I am sure they screwed us somewhere else in the contract to get that money back...pretty sure I paid at least $10K too much to the sight and sound guys..now talk about a monopoly the audio video and window treatment guys the builders make you work with really screw you!:) Will…I think you’re absolutely right…if I am getting an incentive for working with one of your pre-approved lenders then that’s one thing. Our issues rise from the monopoly of being incented to work with a lender and title company that is owned 100% by the builder..if the rates and costs illustrated on the good faith estimates were comparable that would be one thing but in our experiences the builder is getting their incentives and more by charging higher title fees, and points on the loan.
Ramblinwreck..I got everything done through the sales rep, didn’t need to take it up the ladder anymore and I am sure they screwed us somewhere else in the contract to get that money back…pretty sure I paid at least $10K too much to the sight and sound guys..now talk about a monopoly the audio video and window treatment guys the builders make you work with really screw you!:)

]]> By: Hey America, Take Another One For The Team: HVCC Fallout Beginshttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5854 Hey America, Take Another One For The Team: HVCC Fallout Begins Fri, 19 Jun 2009 19:43:08 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5854 [...] protect consumers from unfair incentives tied to a builder’s financial affiliates. We all saw how well that worked out. Then we saw the continued rise of foreclosures in 2009 and now we have the newly implemented bank [...] [...] protect consumers from unfair incentives tied to a builder’s financial affiliates. We all saw how well that worked out. Then we saw the continued rise of foreclosures in 2009 and now we have the newly implemented bank [...]

]]> By: Will Howardhttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5766 Will Howard Fri, 05 Jun 2009 18:51:45 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5766 Thanks Josh, I can appreciate that, however we do not use an "in-house" lender where this would occur. LIke many builders, we have preferred lenders outside of the organization, such as Wells Fargo, SUntrust, BOA, etc; These lenders understand our need of operational control and attend weekly meetings to update us on status. These preferred lenders are very competitive on pricing and rates. They have to be in order to compete for the business from our buyers. Therein lies the beauty of "preferred" lenders as oppposed to in house lenders. They are competitive, offer exceptional service to both the builder and the buyer and give us the control we need. It's a beautiful thing!Thanks! Thanks Josh, I can appreciate that, however we do not use an “in-house” lender where this would occur. LIke many builders, we have preferred lenders outside of the organization, such as Wells Fargo, SUntrust, BOA, etc; These lenders understand our need of operational control and attend weekly meetings to update us on status. These preferred lenders are very competitive on pricing and rates. They have to be in order to compete for the business from our buyers. Therein lies the beauty of “preferred” lenders as oppposed to in house lenders. They are competitive, offer exceptional service to both the builder and the buyer and give us the control we need. It’s a beautiful thing!

Thanks!

]]> By: Josh Ferrishttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5744 Josh Ferris Wed, 03 Jun 2009 20:06:05 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5744 Will,No one is disputing the fact that builder financing can be useful for having control over the transaction and expediting the closing.The problem lies in the yield spread premiums and other increased fees that negate the savings the buyer receives upfront. If builder financing was on par with the most competitive "outside lenders" while still providing incentives with no strings attached we wouldn't be having this conversation. Will,

No one is disputing the fact that builder financing can be useful for having control over the transaction and expediting the closing.

The problem lies in the yield spread premiums and other increased fees that negate the savings the buyer receives upfront. If builder financing was on par with the most competitive “outside lenders” while still providing incentives with no strings attached we wouldn’t be having this conversation.

]]> By: Will Howardhttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5740 Will Howard Wed, 03 Jun 2009 12:57:39 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5740 As a VP of Sales for a builder/developer I can tell you we provide paid closing costs through preferred lenders primarily due to the fact that we need to maintain operational control of the closing. The fees we pay for such financing are typical to the industry and any savings is minimal. The need for operational control is of key importance. We have millions of dollars invested with only a small fraction of the sales price given as a deposit. We have to rely on our lenders to submit pre-approvals, update us regularly on issues which relate to the financing and notify us of any problems immediately so that we can either rectify or stop construction on the home.If we didn't have our preferred lenders, we would not have this control. When we do allow "outside" lenders, we invariably run into problems receiving the information in a timely fashion. Not only do these delays hurt the builder, but the buyer as well.Further, we do not tell the buyers they must get their financing with ABC Mortgage. What we explain to them is that they have the option of going with any lender they choose; however if they use one of our preferred lenders we will participate in paying closing costs, because we have faith and confidence in these lenders to get the job done for both the builder and the customer. As a VP of Sales for a builder/developer I can tell you we provide paid closing costs through preferred lenders primarily due to the fact that we need to maintain operational control of the closing. The fees we pay for such financing are typical to the industry and any savings is minimal. The need for operational control is of key importance. We have millions of dollars invested with only a small fraction of the sales price given as a deposit. We have to rely on our lenders to submit pre-approvals, update us regularly on issues which relate to the financing and notify us of any problems immediately so that we can either rectify or stop construction on the home.

If we didn’t have our preferred lenders, we would not have this control. When we do allow “outside” lenders, we invariably run into problems receiving the information in a timely fashion. Not only do these delays hurt the builder, but the buyer as well.

Further, we do not tell the buyers they must get their financing with ABC Mortgage. What we explain to them is that they have the option of going with any lender they choose; however if they use one of our preferred lenders we will participate in paying closing costs, because we have faith and confidence in these lenders to get the job done for both the builder and the customer.

]]> By: Rich Johnsonhttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5715 Rich Johnson Thu, 28 May 2009 16:14:53 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5715 It's plain old Yankee ingenuity. Builders are competing for a limited resource ie: a Buyer and they will do what ever it takes to close one. There is a fairly large builder / developer in our area that is offering commission advances to the selling agent after the purchase agreement is written.I think with any incentive, it's imparative that the people involved read the fine print & understand what bumps in the road might be waiting for them. If it sounds to good to be ture, it probably is. It’s plain old Yankee ingenuity. Builders are competing for a limited resource ie: a Buyer and they will do what ever it takes to close one. There is a fairly large builder / developer in our area that is offering commission advances to the selling agent after the purchase agreement is written.

I think with any incentive, it’s imparative that the people involved read the fine print & understand what bumps in the road might be waiting for them. If it sounds to good to be ture, it probably is.

]]> By: Eric Bramletthttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5629 Eric Bramlett Wed, 13 May 2009 15:32:03 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5629 <blockquote>Not sure about other states, but here in Texas a buyer and seller can agree to just about any terms in the sale or purchase of a home.</blockquote> That's so oversimplified, it's ridiculous.Lance, the problem is that the practice is anti-competitive. If you offer $10k in incentives, but tie it to your lender (who you have an ownership interest in) then that lender can offer a deal that's $9999 worse than the competition, and still win it. It becomes even more convoluted when the lender offers a worse interest rate in order to make a nice yield spread - the buyers are often focused on the $10k incentive and so ignore the poor interest rate.In my opinion, for the same reason that banks can't sell real estate or offer legal services, builders shouldn't lend. At the minimum, this anti-competitive practice should be legislated away.

Not sure about other states, but here in Texas a buyer and seller can agree to just about any terms in the sale or purchase of a home.

That’s so oversimplified, it’s ridiculous.

Lance, the problem is that the practice is anti-competitive. If you offer $10k in incentives, but tie it to your lender (who you have an ownership interest in) then that lender can offer a deal that’s $9999 worse than the competition, and still win it. It becomes even more convoluted when the lender offers a worse interest rate in order to make a nice yield spread – the buyers are often focused on the $10k incentive and so ignore the poor interest rate.

In my opinion, for the same reason that banks can’t sell real estate or offer legal services, builders shouldn’t lend. At the minimum, this anti-competitive practice should be legislated away.

]]> By: Sonkahttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5628 Sonka Wed, 13 May 2009 15:26:09 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5628 Not sure about other states, but here in Texas a buyer and seller can agree to just about any terms in the sale or purchase of a home.Home builders are not special, they are just "very experienced" sellers who have specific goals included within their contract negotiations.Loans and purchase terms are always "agreed to" by buyers and/or their representatives, therefore HUD has no place to mingle regarding negotiated incentives.If the deal does not make sense, both the buyer and seller have the right to walk away prior to contracts being executed. Not sure about other states, but here in Texas a buyer and seller can agree to just about any terms in the sale or purchase of a home.

Home builders are not special, they are just “very experienced” sellers who have specific goals included within their contract negotiations.

Loans and purchase terms are always “agreed to” by buyers and/or their representatives, therefore HUD has no place to mingle regarding negotiated incentives.

If the deal does not make sense, both the buyer and seller have the right to walk away prior to contracts being executed.

]]> By: Eric Bramletthttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5522 Eric Bramlett Fri, 01 May 2009 13:24:25 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5522 It's a custom design. :) It’s a custom design. :)

]]> By: sell my homehttp://ericbramlett.com/hud-caving-home-builder-demands/#comment-5518 sell my home Fri, 01 May 2009 10:02:43 +0000 http://www.ericbramlett.com/blog/?p=712#comment-5518 What template are you running on this site ? I really like it. Could you post where you got it from ? What template are you running on this site ? I really like it. Could you post where you got it from ?

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