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#1137032 - 02/27/09 12:12 AM RESPA Violation
BillyBob Offline
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Joined: Aug 2006
Posts: 78
Our credit product guys want to offer a loan product in which we contribute up to $20,000 in closing costs for the borrower if he/she finances (through us) the purchasre of a new home from a builder that we finance. Obviously, the purpose is to stimulate sales for some of our builders.

Nothing by way of a fee, discount or other thing of value flows to the builder except that they get to sell one of their homes.

Is there a Section 8 issues here that I am missing??
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#1137111 - 02/27/09 04:25 AM Re: RESPA Violation BillyBob
buggs Offline
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$20,000 in closing costs? How does that work? Do you ever have that much in closing costs, or are you paying part of the purchase price?

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#1137971 - 02/28/09 12:33 AM Re: RESPA Violation buggs
BillyBob Offline
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Joined: Aug 2006
Posts: 78
The offer is 3% of closng costs up to $20,000.

Some of these are high-end homes that could indeed have closing costs in excess of $20,000.

There is no buy down of purchase price.
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#1138143 - 03/02/09 01:52 PM Re: RESPA Violation BillyBob
RR Joker Offline
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The Swamp
If the benefit is going to the purchaser, no issue. If it is in any way indirectly benefiting the builder...then you have a problem, in my opinion.

This could be looked at in either direction...since, at least in our market, the seller generally pays the majority of closing costs. If it were me, I'd run it past my regulator, just to be on the safe side.
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#1138155 - 03/02/09 02:08 PM Re: RESPA Violation RR Joker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:
the purchaser of a new home from a builder that we finance.


My first impression is, because of today's real estate market, you have a borrower in potential trouble and the closing cost incentive being specific to this builder would be an indirect monetary benefit to the builder to get their homes sold and in return get your loan paid off.

That's just one train of thought. Generally incentives directly to the borrower present no problems, but in today's market I wouldn't take anything for granted. Do as RRJ suggested and discuss the plan with your examiner.
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