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I am buying an “affordable home” through John Laing homes. They insist that I have to use John Laing Mortgage and that they have the legal right to do so. My mortgage broker says that is untrue. Does anyone know if it is legal for the builder to require me to use their in-house mortgage company? I am based in California.

7 Thoughts on Need mortgage answer fast – Home builder mortgage issue.?
  1. Reply
    Brandon B
    February 6, 2014 at 7:39 am

    It’s not legal for them to do so. It would also go under the predatory lending laws.
    WOW, with everything going down right now and the FBI shutting down mortgage companies every day I can’t believe someone would try that.

  2. Reply
    alterfemego
    February 6, 2014 at 8:30 am

    No they can not force you to use their mortgage company. You have the legal right to select your own. However, if they are offering some incentives to purchase one of their homes, it may not apply if you use some other lender.

  3. Reply
    vettedude02
    February 6, 2014 at 9:28 am

    It is not legal, you can opt to use any company you wish to use. They may have an incentive or slightly better offer if you sue them but that also means that they would try to pick the title company and they then make profit on each step of the deal. If the house is a deal for you, this is their way of recouping part of their loss or at least adding to their profit.

  4. Reply
    Big Deal Maker
    February 6, 2014 at 10:07 am

    They are working with the lender and the reason they are requiring that you use there lender is they are assured of being paid.
    Besides the little bit of kickback they get.
    However you can go to FHA. and see the lenders there…Also i do advise everyone to hire a real estate attorney to look over all of your loan papers before you sign a thing. There few hundred they will charge you may be well worth there fee.

  5. Reply
    teacherintheroom
    February 6, 2014 at 10:24 am

    They cannot force you to use their mortgage lender once you have a signed agreement. Unless it is stated in the agreement that you will use their lender. However, they CAN refuse to sell you the house. You can pursue it legally but it will cost you an arm and a leg in legal fees. Better to find a different house and report them to the better business bureau and the CA state banking comission.

  6. Reply
    financing_loans
    February 6, 2014 at 11:11 am

    Most builders that are big have their own mortgage companies. I cant believe they said you have to use our mortgage company to do your loan. Normally they are smarter. They will normally say we will give you 3% toward your closing cost, or a 3% discount on your home if you use our preferred lender.

    No way they can tell you which lender to use. Unless they want to lose alot of licenses.

  7. Reply
    Dawni Do Right
    February 6, 2014 at 11:45 am

    I believe this builder is in violation of RESPA to require the use of only his preferred lender and therefore denying you your right to shop for the best loan and rates.

    RESPA will require them to provide you with an “Affiliated Business Arrangement Disclosure”.

    From HUD:
    Affiliated Business Arrangements. Sometimes, several businesses that offer settlement services are owned or controlled by a common corporate parent. These businesses are known as “affiliates.” When a lender, real estate broker, or other participant in your settlement refers you to an affiliate for a settlement service (such as when a real estate broker refers you to a mortgage broker affiliate), RESPA requires the referring party to give you an Affiliated Business Arrangement Disclosure. This form will remind you that you are generally not required, with certain exceptions, to use the affiliate and are free to shop for other providers. http://www.hud.gov/offices/hsg/sfh/res/sc2sectg.cfm

    Your agent should ask for a copy of this Affiliate Disclosure.

    You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders. http://www.hud.gov/offices/hsg/sfh/res/resborwr.cfm

    A quick call to HUD’s toll free number should confirm this for you (800) 569-4287

    Although we require ALL buyers on our new construction homes to additionally be qualifed by our preferred lender, the buyer is not obligated nor required to use them. We implemented that because we have had far too many supposedly qualified buyers that could not get loan approval.

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