One of the silly games we’re seeing is the requirement for a buyers to prequalify AGAIN with a loan officer of the bank that’s selling the home. I see this as a huge conflict of interest, and potentially even an easy way to discriminate.
In a recent deal that I just closed, the buyer, after prequalifying a SECOND time, ended up using the banks own lender(Countrywide). They did a TERRIBLE job from start to finish. Then the seller (also Countrywide) tried to charge the buyer late fees for not closing on time when the problem was ENTIRELY the fault of Countrywide’s lending side.) Then they claimed that they’re two separate companies, and that any delays were the buyer’s problem. Took me two days of arguing and threatening not to close at all to get them to back down on the late closing penalties.
One of the reasons this was so upsetting, was that the buyer went with them because they offered an 1/8 better on the interest rate up front, and then, lo and behold, they didn’t deliver it when it got time to lock it. He still ended up with the same rate as Ruth had available for him in the first place. And then they did a terrible job on top of it.
Can you help out by signing this petition to make it an illegal requirement.
To: Housing & Urban Development
Petition to amend RESPA section 9
Section 9 of the Real Estate Settlement Procedures Act restricts a seller from requiring the use of a particular title insurance company as a condition of the sale.
We would like to amend that section to include a prohibition of sellers requiring buyers to be pre-approved by a particular lender or lending institution as a condition of the sale, or as a consideration for determining a buyers suitability. “Sellers” to include builders and bank owned homes.
RESPA section 9 currently;
prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.
Due to the fact that the majority of properties on the market are bank owned or require bank approval of short sale, buyers are constantly encountering the requirement that a buyer provide a pre-approval letter from a specific lending institution. Further, we are now seeing a requirement of using a specific lender within a specific lending institution before an offer will be submitted or considered. The seller states that the buyer can use any lender they want, but before they will be considered, they must be approved by the sellers’ lender of choice, even in the case of a cash buyer with proof of funds. By creating the requirement of using a specific lender or institution prior to submitting a buyers’ offer, sellers may use this as a technique to discriminate against certain buyers. This also requires a buyer to go through the approval process many more times than necessary, which can be detrimental to their credit score. Additionally, the added time required to meet with and be approved by a particular lender adds un-necessary time to an already lengthy process. With this in mind, the following amendment to RESPA section 9 is requested:
We the undersigned petition the Department of Housing and Urban Development to amend section 9 of the Real Estate Settlement Procedures act to include the following:
Sellers of real property, including new home builders and REO home sellers are prohibited from requiring a lending pre-approval from a specific lending institution or a specific lender as a condition of a sale, or as a condition of consideration for determining a buyer’s suitability for a sale.