builder causing problems

reno55 · ‎08-13-2008

Long story short we signed purchase agreements and contracts with Ryan homes to build a new house. We were already approved for an FHA loan through another lender and when we signed the papers for the house they told us we had to try to go through NVR Mortgage first and if we were not approved through them then we can use the lender of our choice. We were told we had to do this to keep all the incentives. Our concern was going through NVR we would have to pay collections as the lender who already approved us we did not. Well we signed the loan papers with NVR and locked in at 6% now 2 months later we are told that collections must be paid or closed. this really screws us as now rates are higher and we have to start from scratch. I have spoken to our sales rep and told her that I expect and will accept nothing less than Ryan homes buying points to get us back to the 6% rate and contributing enough money to get us to the $6068 we needed to close. My reasoning for this is if they let us use our own lender in the first place we wouldn't be in this situation. Am I way off base here? Anyone have anything to add? Just looking for thoughts

Anonymous · ‎08-13-2008

Sounds pretty shady and they misinformed you to make the deal.

All your incentives money were likely tied into higher rates/fee's with their mortgage company to cover the money they gave you in incentives. Big trick Builders...

Question: If your initial lender did not require collections to be paid then why did you go to their mortgage company and agree to pay them?...This is where they've got you as it sounds like they told you that you would have to pay them upfront??

reno55 · ‎08-13-2008

@Anonymous wrote:
Sounds pretty shady and they misinformed you to make the deal.
All your incentives money were likely tied into higher rates/fee's with their mortgage company to cover the money they gave you in incentives. Big trick Builders...
Question: If your initial lender did not require collections to be paid then why did you go to their mortgage company and agree to pay them?...This is where they've got you as it sounds like they told you that you would have to pay them upfront??

We have NOT paid any collections. We told NVR that we will now find another lender. I wanted to use the lender we had to begin with but they said the only way we can transfer the incentives was to go through NVR first and if we could not get the loan secured through NVR then everything transfers. My problem with this is now this has cost us money and potentially cost us losing our house.

Anonymous · ‎08-13-2008

Oh the builders...the builder I want to go with has an even funnier requirement...they require you go through their preferred lenders....to go FHA...and if you do not go through their preferred lenders...you must go Conventional...with a $2000 earnest payment....BS....

Anonymous · ‎08-13-2008

Although annoying, it is prefectl;y normal for new home builders (especially the big ones) to "require" you to use their lender as a condition for the incentives. Does it suck, of course. Is it legal and a sound business practice, of course. The incentives are specifically for people who finance in house. Car dealers do the same thing all the time. It's no different then all the "special pricing" you get from retailers when using their store card. The part about paying the collections suck, but is very common. With tighter restrictions and weary underwriters, I would bet that all collections paid(maybe with exceptions for ones ready to fall off, ones that are under dispute, or due to a documented hardship) will become alot more common.

reno55 · ‎08-13-2008

@Anonymous wrote:
Although annoying, it is prefectl;y normal for new home builders (especially the big ones) to "require" you to use their lender as a condition for the incentives. Does it suck, of course. Is it legal and a sound business practice, of course. The incentives are specifically for people who finance in house. Car dealers do the same thing all the time. It's no different then all the "special pricing" you get from retailers when using their store card. The part about paying the collections suck, but is very common. With tighter restrictions and weary underwriters, I would bet that all collections paid(maybe with exceptions for ones ready to fall off, ones that are under dispute, or due to a documented hardship) will become alot more common.

I understand the methodology behind them wanting to keep it in house however this has cost us the home of our dreams and alot more money......there has to be some repercussion

Anonymous · ‎08-13-2008

I understand, and would think in this market the builder would help you out just so they don't have to re-sell the house and go through those expenses. That said, I am not sure there is any "legal" repurcussions as they are allowed to link incentives with products. And, you still have the option of using outside sources. Unfortunately now the rates are up so that is a more expensive option thatn it was. I hope it all works out.