San Antonio's Rockstar Turned Realtor®: RESPA changes coming from The Department Of Housing and Urban Development - UPDATE

RESPA changes coming from The Department Of Housing and Urban Development - UPDATE

New home construction - Modesto - California - 2002

photo courtesy of Great Valley Center Image Bank

The Department Of Housing and Urban Development makes more changes.

I reported back on November 25, 2008 on the REPSA changes coming from The Department Of Housing and Urban Development involving builder incentives and the use of "preferred" lenders.  This morning, in my inbox, I discovered that although the change was scheduled to take effect on January 16, 2009, it will now be pushed back 90 days.

HUD's stance has been that home buyers are being penalized if they choose not to use the builder's "preferred" lenders.  The National Association Of Home Builders (NAHB) feels that these incentive programs boost competition, reduce costs and give consumers a "full range of options to explore the best possible deal to purchase a home."  I have to say, I feel like I'm missing something there, as I don't see where this would boost competition, as they are reducing competition from lenders by getting people to use one lender instead of letting them choose from multiple lenders in a free market.  What frustrates me is that those incentives are built into the pricing of the house, allowing them to shave it off the price when they want, but in this case, only if you use their lender.

If you're thinking of buying a new house.

Apply for the builder's "preferred" lender's loan as you would normally.  In the meantime, shop the loan around and see what other lenders will give you.  Sometimes the rate may be better on one or the other, but the upfront costs will be more.  You really need to weigh the differences between the loans and a good agent should be able to assist you if you find it all confusing (loans can be, you're not alone).  You need to know what matters to you more.  Do you have cash upfront or little cash and know you could afford a slightly higher monthly payement?  Does the incentive balance out in the long term with the costs associated with the loan?  These are all things you need to consider before signing on the dotted line and I encourage you to speak with an agent who can be objective (and knows their way around a loan) and/or your financial advisor.

Comment balloon 6 commentsMatt Stigliano • January 16 2009 01:49PM

Comments

Hi Matt - thanks for the update.  I am wondering if "pushed back" means "won't happen", I suppose we shall see soon enough.  KM

Posted by Kristin Moran, San Antonio,TX - Real Estate - 210-313-7397 (Owner - RE/MAX Access - KristinMoran@Remax.net) about 11 years ago

Matt...

My stance, either do something or not, but these "takes effect in 90 days" regs make no sense to me at all!

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) about 11 years ago

Matt, I was disappointed to hear of the 90 days push back.  I think buyers need it NOW, so they can chose and not be financially punished for making the choice.

Posted by South Austin Real Estate Blog (Sky Realty South Austin) about 11 years ago

Kristin - That's kind of my fear.  Usually when something's pushed back it means someone's pushing hard to get it removed and they'll stop at nothing to do so.

Brother Richard - I have never understood that.  "We don't want to make it too immediate, it would affect people."  Um, isn't it affecting people now - wouldn't that be the reason you (HUD) are trying to do away with it?

Gail - I'm very disappointed.  I like the local builders and have nothing but respect for the fact that they're trying to make a living just like the rest of us.  They keep me busy and give me open houses.  I can't complain.  But don't try and sell me that its in the interest of competition, giving consumers a "full range" of options (that one I can't even try to figure out), and keeping costs low.  That's just absurd.  Then again, I feel the same about anyone who's got people lobbying for them on this issue or that.  NAR at times has sent me those "write your congressman" letters where the spin on what they were saying sounded great, but what they were selling was something I'm not interested in supporting.  We all use propaganda to our benefit, its just how you use it.

Posted by Matt Stigliano (Kimberly Howell Properties (210) 646-HOME) about 11 years ago

Hey Matt, I recently wrote a post on the same subject and in my research found a HUD spokesman said the 90 day injunction did not mean the new RESPA provision would not take effect. HUD felt, if anything, the delay helped them get their legal ducks in a row in support of the provision.

Glad to know there are others who see through NAHB's "competition" crap -- really? C'mon.

Just come out and say, "Look, we've been burned by a lot of really bad lenders we didn't know, and would rather keep it simple and work with our own." That argument makes more sense. Probably wouldn't make a difference to HUD, but its at least a valid argument.

Posted by Nicole Lahti, Austin Texas Mortgage (United Lending) about 11 years ago

Nicole - I (obviously) couldn't agree with you more.  I was talking to someone about a situation here in town that's been going on and we got to talking about propaganda.  Propaganda has such an evil connotation these days (I would say thanks in large part to WWII), but if you look at what most companies put out to the press, it is exactly that.  Most people view propaganda as the wrong side's efforts, but even the right side in a battle uses propaganda.  I see the NAHB's statement as nothing more than propaganda.  Throw the words "boost competition" into the fray and most people will nod their heads and say, "Yes, we don't want less competition...they must be right."  In a world that's obsessed with destroying monopolies, a lack of competition is an easy to use phrase that would incite anyone to back up whatever you desire.  I'd love to see a good answer to the competition angle and how it boosts it.  Your idea of an argument that they should have used wouldn't have set off too many alarms in my head.  I understand their desire to work with lenders they know and trust.  We all want to work with people we know can get the job done.  We all keep lists of people we know are the best at what they do and that we can call on day or night to solve a problem, that's part of being in this industry.  Just don't sell me a duck and tell me its a swan.  There's a difference and the more people educate themselves (both professionals and consumers) the more these sorts of statements will become useless to the corporate world.  Thanks for stopping by and I really enjoyed your comment and I look forward to hearing more from you.

Posted by Matt Stigliano (Kimberly Howell Properties (210) 646-HOME) about 11 years ago

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