Lender Tricks - Watch Those Hidden Fees
November 13th, 2007 Categories: Mortgage and Finance
When selecting a mortgage company to finance that new Raleigh home, be sure to make your comparison carefully. Buying a home requires most people to get a mortgage. If you don
Bob,
Sounds to me like Raleigh, NC. is very luck to have a fiduciary agent such as yourself. Great job in pointing that out to your clients.
Up here in the North Georgia Mountains, we don’t deal too much with similar instances. We deal primarily with second homes, so most of our buyers are cash buyers or they already have an established relationship with a lender. However, when the opportunity arises, we do educate them on the best and most trusted in town.
Chad
Great catch. Now that lender lost a bunch of loans. Hard to believe they would have the nerve to do that.
Chad - You’re lucky not to have to deal with this issue. Our market here in Raleigh is about 40% new construction homes. Almost every builder has incentives tied to using their preferred lender/attorney. My job is, as you say, to be a fiduciary for my clients. Working with unknown lenders and attorneys creates more possibility for things to go really bad when the train jumps the tracks. I counsel my clients to get the very best terms possible from a lender, and if at all possible, make it someone we have a relationship with who can be called to task when problems arise.
Marty - You can bet I’ll be cautioning anyone I have who is considering working with this lender in the future.
Good catch! That’s why it is so important that buyers select a real estate agent who is knowledgeable about all aspects of buying a home. I want to point out that just because this particular lender did that, that is in no way the “norm” with builder’s preferred lenders. As a preferred lender for a builder, my builder truly pays the closing cost incentive they offer and I don’t have to “build it in” anywhere. Thank you for educating people to truly look at the estimates. It is difficult to truly compare estimates these days when there are so many different ways to structure a loan. It’s nice that your buyers have you to help make sense of it all.
Hi Sheri,
It’s good to hear from you on this! You are a great example of a builder’s preferred lender who does NOT use tricks like what I recently encountered. I have worked with you on several occasions and the experience was great! I look forward to doing it again!
Unfortunately, when things like this happen it puts everyone on the defensive and gets us looking with suspicion at incentives. For the record, I should let everyone know that I have had other clients who took advantage of genuine incentives from builders using preferred lenders that were not recovered through hidden, or puffed up fees.
At the same time, it has happened enough that it is worth “watching for.” The best advice I can give any client is to get good faith estimates and compare them carefully. Clients should ask their Realtor’s advice. A good agent who is watching out for their clients’ best interests will tell them the truth and help them understand when estimated closing costs look real and when they don’t.