Builder Sneakiness

MORTGAGE MAGIC

The Mortgage Marketing Newsletter for Loan Officers that are Serious About Their Business

From: Ameen Kamadia, President of Kamrock Publishing

Dear Friend,

Builders are getting sneakier everyday.

Here's a stat you won't like.

Did you know that Builders do 80% of the loans on homes they sell?

If you live anywhere near a new development you already know that builders will do anything to get the loan. And there is little we as brokers can do about it. I mean, how do we compete with them when they are offering $10,000 in free upgrades?

But they have gotten even sneakier.

Abby, told me just last week about a new test program started by Pulte. If it's successful they will role it out nationwide. But other builders have already started to copy them.

Here's what happened. One of the loan officers in our office, also has a real estate license, and he was showing a couple a new Pulte home. The couple really liked the home and were almost ready to sign the contract.

While the couple was downstairs looking at the model, the L.O. went upstairs to introduce himself to the builder rep and to inform her that he was the Realtor AND the mortgage broker for this couple so not to try to weasel the loan away.

She commented that almost 70% of the Realtors she meets with say the same thing to her. And because of that, Pulte has a new program where is the Realtor/L.O. does not get in the way of Pulte doing the loan, Pulte will pay the Realtor 6% commission instead of the normal 3%. But if they could not do the loan or give a competitive rate, he could then submit a GFE and still get the 6%.

When I first heard this, my jaw hit the floor. They are basically bribing Realtors to let them do the loan in exchange for a double commission!

What I can't decide is, if this is a good thing or bad thing.

In this case, the house price was about $140k. So 3% is a lot more than this L.O. was going to get doing the loan. He made out better for doing less work.

But if you are in the same situation and you do not have a real estate license, forget about it. If all builders adopt this policy, they will capture 100% of the market very soon.

So if you can, (some states don't allow it) get yourself a Real Estate license. It's the trend across the country and has already become very common in California, Texas, and Florida.

Happy Originating!

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