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Developer's Preferred Lender

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Heavanly1
Regular Contributor

Developer's Preferred Lender

During my initial months of househunting, I had a wonderful loan officer who I thoroughly enjoyed working with. I finally found a home (new construction)  and was told that in order to receive the 3% closing cost assistance, I would have to use the developer's preferred lender (and would have to pre-qualify with them regardless of whether I decided to use them or not). Because I'm a first time homebuyer and every penny helps, I chose to switch to the preferred lender in order to receive the closing cost assistance.

 

To put it nicely, the new loan officer, while extremely nice and pleasant, leaves much to be desired. I often have to call or email three or four times before I receive a response, which can take anywhere from a week to three weeks to get. I'll call anticipating leaving a message only to discover that the voicemail box is full and isn't accepting new messages. When they do return calls, it's often at ridiculous hours like 10PM. I even received a phone call from my chosen homeowner's insurance company saying they've reached out to my loan officer, but never received a return call.  Because my home is close to being completed and I'll be entering underwriting soon, I'm terrified that this loan officer's lack of follow-up could equal a delay of my closing date.

 

I soon discovered that my original loan officer had switched jobs and now is housed with the preferred lender. I finally decided to complain to my realtor and the seller's realtor and asked if I could switch loan officers yet remain with the preferred lender. The seller's realtor tells me that I have to use the specific loan officer in order to receive the closing cost assistance.

 

I'm leary of this answer. Is that correct? My original loan officer states that requiring me to work with a specific loan officer is a violation of RESPA.

 

Any insight anyone can provide me would be greatly appreciated.

Message 1 of 4
3 REPLIES 3
Booner72
Senior Contributor

Re: Developer's Preferred Lender

Sounds fishy to me.  I'd be extremely irritated if I had to wait more than a few hours to get a call back from a loan officer.  I, too, would worry closing could be delayed with someone who operates business like that.  Hopefully a LO will come on and answer specifically your legal rights.

STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Message 2 of 4
Anonymous
Not applicable

Re: Developer's Preferred Lender

I ran into a similar situation -- but keep in mind, they aren't *REQUIRING* you to work with the specific officer. They're requiring you to work with them *IF* you want the incentive.  Their incentive, their rules, most likely.  The bank that your builder is requiring you to work with isn't WellsFargo by chance is it?  I've noticed the exact same thing with lack of response during the day then late night emails back.  A bit annoying, but a $5k up-front incentive is alot of money..I'm jumping through the hoops for it.

Message 3 of 4
ShanetheMortgageMan
Super Contributor

Re: Developer's Preferred Lender

You hold all of the cards.  The builder needs you to buy the home from them, you can buy a home from anyone but there are only so many homebuyers out there looking specifically at new homes.  While they haven't done anything that violates RESPA, I would bring this up and tell them this could be a potential dealbreaker and for them to get with the developer and let you know what their final say on it is, when you start to sound more serious then they'll give you a more serious & definite response.  You can also bring this up to your less-than-steller-new-loan-officer's-manager and see where it gets you - it may prompt your new loan officer to be more on the ball or perhaps you'll just be internally re-assigned to your original loan officer and they won't even tell the builder so you can get the 3% credit anyway.

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