Quote:
Originally Posted by forcedfx
I haven't signed anything. I'm going tomorrow afternoon to discuss options and give them a good faith deposit. Later I will be meeting with the lender to discuss financing. Not sure when that will happen. I am emailing the builder's rep right now with the questions you gave me. All of my communication thus far has been through email. Good ole gmail saves everything.
With RESPA, if my rate lock expires I can shop for other lenders AND keep the incentives?
|
Okay, first RESPA has been enforceable for years. This is new section of the law THAT WAS to go into effect tomorrow. The builders across the USA got a stay on the execution, so to say. For 90 Days. After 90 days the law is suppose to go into effect and THEN new loan applications (possibly loans in the pipeline, waiting to close). I went to pull the HUD regs and got a 572 page document and then another search pulled the Federal Register (where it's recorded as law on 86 pages......boring), so I poked around and found someone that eloquently spelled it out for you. This is from a law firm and is dead on as I remember the new regs:
12 | 19 | 2008 Legal e-Update
The Department of Housing and Urban Development (“HUDâ€) adopted a final rule on November 17, 2008, that amends HUD’s regulations implementing the Real Estate Settlement Procedure Act (“RESPAâ€) in several significant respects. Builders that have affiliated settlement service providers, such as mortgage lenders, title companies and escrow companies, will be particularly interested in how the new rule’s revised definition of “required use†will affect them and their affiliates. Under RESPA, a consumer cannot be “required to use†a builder’s affiliated company for other settlement services.
Before the new rule was proposed, it was assumed by many that builders could condition buyer incentives, such as discounts on the sales price of a home, on the buyer’s use of the affiliated service provider as long as the use of the affiliate was optional and the builder was charging no more than the market price for the home before the discount. The incentive was tied to the use of the service provider under the theory that it qualified for the “bundled services exception†for an affiliated service provider. In fact, a consumer FAQ sheet on HUD’s own Web site supported this conclusion.
The revised definition of “required use†makes clear that (i) a referral to an affiliated settlement service provider would constitute “required use†if the referral includes economic disincentives that can be avoided or incentives that can be obtained only by utilizing the affiliate, and (ii) the “bundled services exception†applies only to settlement service providers, not builders or home sellers. Under the new rule, affiliated settlement service providers may still offer a combination (“bundleâ€) of settlement services, such as escrow and title services, at a total price (net of discount) lower than the sum of the market prices of the individual settlement services.
The final rule, which goes into effect on January 16, 2009, also makes other significant changes to the way RESPA is implemented. These include revisions to the Good Faith Estimate form and HUD-1/1A statement, which will be of interest to lenders and escrow companies in particular.
With the adoption of this new rule, existing buyer incentive programs should be reviewed carefully, particularly where affiliated settlement service providers are involved.
Found here:
Luce Forward|News & Articles| New RESPA Rule Limits Home Builders' Ability to Incentivize Use of Affiliated Settlement Service Providers (http://www.luce.com/respa/ - broken link)
This article is from the builder's point of view:
HUD Blinks Over Incentives Rule
Under legal pressure, HUD agrees to delay prohibition on discounts connected with builders directing buyers to affiliated mortgage or title companies.
By:
John Caulfield
[LEFT]The U.S. Department of Housing and Urban Development (HUD) has agreed to delay by 90 days the implementation of a final rule affecting the required use provision in the Real Estate Settlement Procedures Act (RESPA). That rule change was to go into effect on Jan. 16, but in all likelihood would have been delayed anyway by the U.S. District Court in eastern Virginia, which had ordered a hearing on Friday to weigh arguments for and against its granting a preliminary injunction postponing the enactment of HUD's RESPA revisions. The NAHB, which filed a lawsuit against HUD on Christmas Eve, had requested that hearing.
Brian Sullivan, a HUD spokesman, told BUILDER this morning that the department had acted on the advice of the U.S. Attorney's Office, which is representing HUD in this case, to agree to the delay so that it would have enough time to assemble the administrative records and other data it needs to mount its defense against the NAHB and co-plaintiffs, which include 13 large builders and their affiliated lenders and title companies.
"This is a court that likes to handle injunctions right away," says Sullivan. "And the court probably would have put a lot of pressure on the defendants to delay by saying that 'RESPA's been around for more than 30 years, what's another 90 days?' "
On Nov. 17,
HUD published amendments to RESPAthat included a final rule that would eliminate an exception that allows builders to offer home buyers incentives—such as a price discount or guaranteed interest rate—if the buyers use a preferred title agency, mortgage company, or affiliated service provider. That exception has been on the books for 16 years.
NAHB spokeswoman Donna Reichle says that, on advice of counsel, the trade group isn't commenting on pending litigation against HUD. Therefore, BUILDER could not ascertain at press time if the NAHB had accepted HUD's agreement or whether that agreement made the preliminary injunction hearing moot.
However, HUD's agreement to delay certainly won't put an end to the NAHB's complaint about a final rule on required use its
lawsuit calls "capricious" and contrary to existing law. The trade group insists that home buyers benefit from builder-lender affiliations, which make on-time closings more likely and "give buyers more choice in loan products and lower costs." Preventing closing delays is critical to builders at a time when many are struggling with cash flow and maintaining asset levels upon which their loans with banks are gauged. The NAHB contends that the rule change would prevent builders from purchasing forward commitments from affiliated lenders "that ensure their customers will have competitive financing." In addition, the NAHB says that dismantling these mortgage and title affiliations will lead to job losses (the implication being that some of these affiliated companies would cease to exist without their connections to builders), disruptions to builders' business models, and reductions in buyers at a time when the housing industry continues having difficulty selling houses.
HUD, on the other hand, wants to "delink," in Sullivan's words, all builder incentives tied to the use of an affiliated lender or service provider. It also contends that its final rule would bring greater transparency to the mortgage lending process. "HUD believes that some businesses have used ... the exception to steer consumers to affiliated settlement providers that may not provide the best mortgage products or settlement services for those consumers," Sullivan states.
In an e-mail to BUILDER yesterday, Sullivan provided three documented examples:
•A buyer was offered a $22,000 discount on the price of a home for using a builder's affiliated lender whose interest rate was a half percentage point higher than the market rate;
•A buyer was required to put up more earnest money and would lose a $2,000 "closing incentive" if it didn't use a builder's affiliated lender; and
•A builder offered a buyer a $3,000 incentive on the purchase price and a $6,000 discount toward closing costs if that buyer used an affiliated lender that charged an interest rate 1 percentage point higher than the market rate, as well as additional fees.
In its complaint, the NAHB challenges HUD's conclusions about the impact on buyers of builder-lender affiliations because, it claims, the government has failed to provide substantiating data and has chosen to ignore other consumer surveys that produce opposite findings. The NAHB also questions why HUD is in such a rush to change a 16-year-old rule, and points to a notification sent last August to HUD secretary Steve Preston by 244 members of Congress who considered the comment period for this rule change "not sufficient," and requested that HUD withdraw its proposal.
Sullivan scoffs at suggestions that there's been a "rush to regulate." And he says HUD agreed to the delay in the rule implementation in order to collect data that would support HUD's intended "vigorous defense" of its final rule.
HUD must also contend with a separate suit, filed by the Mortgage Brokers Association, that is trying to block a rule that, as of Jan. 1, 2010, would require lenders and mortgage broker to provide buyers with a "good faith estimate" that discloses loan terms and closing costs. HUD says this rule could save buyers up to $700 per closing. Mortgage brokers feel discriminated against because the rule doesn't apply to banks.
TheWashington Post weighed in this morning on the side of HUD, stating that the government "properly drew a distinction between giving consumers more information about all the factors that have gone into their transactions, as opposed to requiring projections about what banks might get in a future resale of their loans. The new rule constitutes a modest but necessary step toward a more transparent housing market."[/LEFT]
HUD Blinks Over Incentives Rule - Legal Issues, Mortgages And Banking - Builder Magazine
But to answer your question: when this legislation goes into effect, IF YOUR LOAN IS IMPACTED (if it's driven by application date, you would be excluded), yes, you can have your cake and eat it too. But these builders are so far ahead of the rest of us on any of these loopholes.
Insist on writing it in? Not sure how that would work. Ryan does have an outside lender addendum, for buyers that are going to obtain financing NVR cannot provide.....but it's a tough sell to get them to agree.
Anyway, good luck.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
