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My husband and I recently signed a sales agreement on a new construction home with Toll Brothers. We are first-time home buyers, and are working without a real estate agent (long story), so are doing a lot of research on our own (talk about information overload)!
If those aren't familiar with Toll Brothers, they require that buyers submit a loan application with their lender, TBI Mortgage, regardless of the lender they choose. (We get $8k in closing costs regardless of lender as well). Does anyone have any experience using TBI Mortgage? The things I read online about them are horrible, but I also tend to think that more will share publicly a negative experience than a positive one.
In addition to the application with TBI, we are also working with a very highly-rated mortgage broker that we are leaning towards. My understanding is that we can have multiple loan applications, but don't have to commit until closing...is that correct? If we don't end up using the mortgage broker, do we have to pay him?
Well, when it comes to crunch time (locking), if you don't have another application going, your rate won't be as competitive at TBI. You can only be charged for services performed or for guaranteed locks. So, wherever you have applications, at most, you could be on the hook for appraisal fees. But even then, when within 60 days the appraisal can be ordered, so have all appraisals on hold until lock time.
I'm partial, but I also make a nice living closing TB, NV, an other builder loans where their in-house guys can't compete. They need to pay their Board of Directors, their stockholders, and several layers of management - so of course, your best rate is note likely with the builder's lender.
I believe every word of what Smart Money said. My comments are NOT intended to disagree withhis (her?) Opinions and eexperiences.
But I can tell you about our experience using TBI in 2012-2013. I'll also add that I used to be a mortgage salesperson for an online company (mostly doing refi's), so I'm better educated about this process than most.
We went thru the application process with TBI. It was relatively painless. We are retired, and most of our income is from a fairly unusual, but totally legal source, and I did have to get a letter from my attorney about it. Our credit is 800+, we had no other debt, and we were putting 40-50% down. I refused to pay any points.
I contacted several other brokers for quotes. I learned that TBI was offering one thing that no other broker could match: a free 60 day lock with one free float down.
I had TBI do a good faith estimate using their best rate that day when I was 60 days before closing. I went back to one local broker and one online broker (who I had used before for refi's). Both could not do a vetter rate than TBI, and their closing costs were roughly the same. But they could not offer me that free lock with one float down.
We went with TBI, and it all was smooth as silk.
In case you're curious, we're very happy with our Toll home. We have neighbors who aren't so happy, particularly if they have a basement. I'm REALLY sorry to hear that you do not have your own agent. Truthfully, the only dishonest Toll employee we met was the sales agent, and the only way we got what she told us was included as standard was because of our agent. (It added up to $18k in structural upgrades.)
Watch them like a hawk when they are building. Get a pre-drywall AND a pre-closing inspection. (Guarantee you the sales agent says it's an unnecessary waste of money. Don't believe it!)
Maybe things have changed over there, but their extended lock with a float down comes with a price. When you exercise your float down, it typically is not to the current market rate, but the market rate + something. Are you really getting something for nothing? Ask for their lock agreement in writing. Perhaps, take that agreement to an attorney (more on that in a minute), or at least ask other lenders to review the lock float down agreement. We are in a declining interest rate environment, so don't worry about locking unless your qualifications cannot tolerate a rate increase. Float downs are great for busy people for peace of mind. Another thing to consider, TBI does not hold their own loans after closing, but they deliver post closing to the Wells Fargo, Chase and Bear Stearn's of the mortgage world. TBI is accountable to their stockholders where they can't absorb rate lock cancellation fees and none of the correspondent lenders (3rd party) offer free float downs. I am not saying it is not so, just why I believe it's unlikely "free." I know if I were in Toll's marketing department, "get a free float down on every home sold" would be the center of my marketing plan. (But, the fine print would have to be present in that ad).
But, back to that attorney.....it took me a while to find this on the web again, but it's something to be aware of - from June 2011. This is not an attempt to make you second guess yourself or doubt your decisions to date, that is the furthest motive in mind. But it is an attempt to open your eyes given you do not have a Realtor looking out for you. (Besides having added protection, Toll, or any builder, is highly cautious alienating the real estate community). Toll is known within the real estate community for having what I can only term as legal doublespeak. For this reason, you may wish to consider consulting an attorney familiar with Toll. This is an attorney discussing the language in their contract regarding the mortgage and terms for getting their earnest money back. Note: He is in PA. And, it may be prudent to know who you will call before you really need to.......trying to know who you will call when you need them at 3 PM on a Friday afternoon before a 3 day weekend. It won't hurt being prepared.
Quote:
This is a great question and it points out a major hidden trap in the Toll Brothers contracts. Ninety-nine percent of the people who read the contract think it has a mortgage contingency. They all think a mortgage contingency mean that if there is no lender at closing to give them the amount of money set forth in the contract, they will get back their money. This seems logical, doesn't it?? I regularly teach agreements of sale for Continuing Legal Education courses statewide, and I read the mortgage contingency dead wrong for years.
The human brain reads this kind of language and looks for what it expects to find. Toll, in my humble opinion, uses this quirk of human nature.
Here is the problem. The Toll contract says it it contingent not on the buyer actually getting a mortgage, but rather on the buyer getting a mortgage COMMITMENT. It gets worse!! The commitment can be in any amount UP TO the amount stated in the contract. It gets even worse!!!! Toll requires the buyer to apply to their own Toll Brothers mortgage company. They almost immediately give the buyer a commitment, often with conditions that can never be met. When the buyer, like you, realizes that they do not have enough money to buy the house, Toll claims default and threatens to collect on Notes they require to be signed to supplement the down payment and to pay for Options, even if the house is never built.
GET YOURSELF A REAL ESTATE LAWYER MONDAY. I would like to hear from your lawyer immediately. I spent the last few days writing an arbitration demand (the Toll contract prohibits you from suing them in Court. You have to go to AAA arbitration, which will cost you an arm and a leg) for a case just like yours. I would like to find other people who have been put in the position by Toll. I would love to have other buyers who were either forced to buy a house they could not afford, or who lost their deposit when they did not get a mortgage which was funded at closing, come into my case as witnesses. If you have any other friends or acquaintances who have been abused by this Toll scheme, send them to me so I can get their testimony. I will share everything with your lawyer, including my expert in human cognitive conditioning.
LET ME REPEAT (shouting intentional) GET A REAL ESTATE LAWYER WHO IS NOT AFRAID TO BATTLE WITH GOLIATH ON MONDAY. Remember, Goliath died!!
DISCLAIMER The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the Commonwealth of Pennsylvania. Responses are based solely on Pennsylvania law unless stated otherwise. James S. Tupitza 212 West Gay Street West Chester, PA 19380 610-696-2600
Okay, the above will not likely apply to you and I hope it never does. But I show you this to convince you not to sit idly by if you get hints something's "off" at any time during your process, loan or construction. I want your radar on alert and ready. Be aware that part of Toll's income stream is keeping contract deposits.
Quote:
. But the company's financial statements to the U.S. Securities and Exchange Commission show it reported more than $125 million in revenue since 2006 by seizing down payments from cancelled contracts.
I have several clients in Toll Homes that are happy, and I have one very unhappy borrower that walked away from his contract voluntarily, because he and his wife realized they would likely lose nearly the deposit in legal fees, but even more in experts and lost time off. The loss represented 12 month's savings, ultimately written off as a lesson learned. And that is the purpose of the real estate section (IMO), to learn from other's experiences. (Do hire a Class A contractor to inspect at intervals - it can be an inspector, but for new construction, I typically recommend another experienced builder to take a look).
I believe every word of what Smart Money said. My comments are NOT intended to disagree withhis (her?) Opinions and eexperiences.
But I can tell you about our experience using TBI in 2012-2013. I'll also add that I used to be a mortgage salesperson for an online company (mostly doing refi's), so I'm better educated about this process than most.
We went thru the application process with TBI. It was relatively painless. We are retired, and most of our income is from a fairly unusual, but totally legal source, and I did have to get a letter from my attorney about it. Our credit is 800+, we had no other debt, and we were putting 40-50% down. I refused to pay any points.
I contacted several other brokers for quotes. I learned that TBI was offering one thing that no other broker could match: a free 60 day lock with one free float down.
I had TBI do a good faith estimate using their best rate that day when I was 60 days before closing. I went back to one local broker and one online broker (who I had used before for refi's). Both could not do a vetter rate than TBI, and their closing costs were roughly the same. But they could not offer me that free lock with one float down.
We went with TBI, and it all was smooth as silk.
In case you're curious, we're very happy with our Toll home. We have neighbors who aren't so happy, particularly if they have a basement. I'm REALLY sorry to hear that you do not have your own agent. Truthfully, the only dishonest Toll employee we met was the sales agent, and the only way we got what she told us was included as standard was because of our agent. (It added up to $18k in structural upgrades.)
Watch them like a hawk when they are building. Get a pre-drywall AND a pre-closing inspection. (Guarantee you the sales agent says it's an unnecessary waste of money. Don't believe it!)
I'm glad to hear a positive review on TBI We are scared of being taken advantage of since we are first-time home buyers (more so with using TBI). Our loan officer at TBI has really been not helpful at all, hence our hesitance to use them. I also am (very) weary of "if it's too good to be true..." (i.e. TBI are offering to pay for our PMI without ANY "catch..." not sure I buy that!)
The building is pretty much finished (quick delivery home). We absolutely will get an outside home inspector, no question!
Maybe things have changed over there, but their extended lock with a float down comes with a price. When you exercise your float down, it typically is not to the current market rate, but the market rate + something. Are you really getting something for nothing? Ask for their lock agreement in writing. Perhaps, take that agreement to an attorney (more on that in a minute), or at least ask other lenders to review the lock float down agreement. We are in a declining interest rate environment, so don't worry about locking unless your qualifications cannot tolerate a rate increase. Float downs are great for busy people for peace of mind. Another thing to consider, TBI does not hold their own loans after closing, but they deliver post closing to the Wells Fargo, Chase and Bear Stearn's of the mortgage world. TBI is accountable to their stockholders where they can't absorb rate lock cancellation fees and none of the correspondent lenders (3rd party) offer free float downs. I am not saying it is not so, just why I believe it's unlikely "free." I know if I were in Toll's marketing department, "get a free float down on every home sold" would be the center of my marketing plan. (But, the fine print would have to be present in that ad).
But, back to that attorney.....it took me a while to find this on the web again, but it's something to be aware of - from June 2011. This is not an attempt to make you second guess yourself or doubt your decisions to date, that is the furthest motive in mind. But it is an attempt to open your eyes given you do not have a Realtor looking out for you. (Besides having added protection, Toll, or any builder, is highly cautious alienating the real estate community). Toll is known within the real estate community for having what I can only term as legal doublespeak. For this reason, you may wish to consider consulting an attorney familiar with Toll. This is an attorney discussing the language in their contract regarding the mortgage and terms for getting their earnest money back. Note: He is in PA. And, it may be prudent to know who you will call before you really need to.......trying to know who you will call when you need them at 3 PM on a Friday afternoon before a 3 day weekend. It won't hurt being prepared.
Okay, the above will not likely apply to you and I hope it never does. But I show you this to convince you not to sit idly by if you get hints something's "off" at any time during your process, loan or construction. I want your radar on alert and ready. Be aware that part of Toll's income stream is keeping contract deposits.
. Read the full article here: Taking a Toll: Why Home Buyers Say They Lost Their Life Savings When Trying to Purchase Homes | NBC4 Washington
I have several clients in Toll Homes that are happy, and I have one very unhappy borrower that walked away from his contract voluntarily, because he and his wife realized they would likely lose nearly the deposit in legal fees, but even more in experts and lost time off. The loss represented 12 month's savings, ultimately written off as a lesson learned. And that is the purpose of the real estate section (IMO), to learn from other's experiences. (Do hire a Class A contractor to inspect at intervals - it can be an inspector, but for new construction, I typically recommend another experienced builder to take a look).
Good luck
Thank you for sharing this. Are Toll Brothers notorious for their contracts or is this with pretty much all major builders?
Lastly, the person writes "The Toll contract says it it contingent not on the buyer actually getting a mortgage, but rather on the buyer getting a mortgage COMMITMENT." Can you explain the difference?
Thank you for sharing this. Are Toll Brothers notorious for their contracts or is this with pretty much all major builders?
Lastly, the person writes "The Toll contract says it it contingent not on the buyer actually getting a mortgage, but rather on the buyer getting a mortgage COMMITMENT." Can you explain the difference?
The way I understood the attorney, a commitment spells out the terms of the mortgage with the implication being the commitment matches the terms of the contract. What I understand him to say if any mortgage is approved, even if you need to wipe out your savings, you must close or surrender your deposit.
And to answer your question - more Toll homes are sold in the DC area than in any of their other markets. They are known here for their slippery slopes, as well as, the arbitration, settled with non-disclosure agreements. And I am not saying they are not a good builder. They're only as good as the supers in charge, just like any other builder. But Realtors will not speak ill, nor should they. I'm only sharing history and not bringing their craftsmanship into question. I don't need someone serving me because I crossed a line.
Be alert, trust your gut and know who you will run to for help, before you actually need it.
I'm glad to hear a positive review on TBI We are scared of being taken advantage of since we are first-time home buyers (more so with using TBI). Our loan officer at TBI has really been not helpful at all, hence our hesitance to use them. I also am (very) weary of "if it's too good to be true..." (i.e. TBI are offering to pay for our PMI without ANY "catch..." not sure I buy that!)
The building is pretty much finished (quick delivery home). We absolutely will get an outside home inspector, no question!
If they are saying THEY are paying the PMI, that's a load of crap. I'll bet that the loan they are doing involves upfront PMI ir a higher interest rate to cover PMI. Note that neither of those things are bad (in fact, both can be advantageous), but YOU need to understand what's going on.
Years ago, I used to sell mortages for an online company. Essentially, that's how TBI operates. IMHO, very few first time buyers should be getting their mortgage with an online broker. You need somebody who will walk you through this process and explain EVERYTHING. That ain't TBI.
Ask your Realtor (you did have your own Realtor, right?) To recommend two local brokers. If you belong to a credit union, try them as well. You can compare that with TBI if you want, but don't accept their deal unless you completely understand and trust it.
Ask your Realtor (you did have your own Realtor, right?) To recommend two local brokers. If you belong to a credit union, try them as well. You can compare that with TBI if you want, but don't accept their deal unless you completely understand and trust it.
The original post states there is no real estate agent to lean upon, the primary reason I shared a negative narrative - they are on their own.
OP, when you are beyond 60 days out, you cannot effectively shop lenders. When you remove the ability to lock, the quotes you get are all to be questioned. When a lender believes you are ready to lock, the smoke and mirrors disappear and any quote you get can likely be locked. If at any time you want an idea of a quote, you can post the particulars here (or you can DM any one of us here).
Info needed for comparison quote include:. Sales price, loan amount, property type (condo?), credit score, closing date, county of purchase (and state), loan program. And then, is that with or without PMI in the payment, and then, total seller credit available for closing costs.
If rates are concerned are comparable, then start comparing fees and lender credits to see how the quote really lines up.
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We are scared of being taken advantage of since we are first-time home buyers (more so with using TBI). Our loan officer at TBI has really been not helpful at all, hence our hesitance to use them. I also am (very) weary of "if it's too good to be true..." (i.e. TBI are offering to pay for our PMI without ANY "catch..." not sure I buy that!)
