Posted by River City on July 25, 2005 at 05:59:07:
I have never heard of a builder charging a purchaser for not using their lender. I have heard of a builder not offering to pay closing costs for not using their lender, and this is not a violation of RESPA. You might want to double check this with the realtor or even call the builder’s office and speak with someone there. I do not believe a builder can charge a purchaser $3000 for not using their lender. If they are doing this, you want this statement in writing and you need to send it to the Department of Housing and Urban Development in Washington, D.C. as they administer RESPA.
Generally it is not bad to use the builder’s mortgage company. They probably are not going to charge you anything more than any other mortgage company (unless the builder is charging $3000 for not using them). You can go to their mortgage company and get a good faith estimate of closing costs and then compare it to another company’s good faith estimate. They should be very similar.
However, I still think there was a misunderstanding as to what was said. I believe the realtor meant that if you did not use the builder’s choice of lender, the builder would not contribute to the closing costs. I definitely would not use a builder that would add a charge to my purchase for not using their lender.