Getting a loan from the builder due to their incentives program?

Builders are becoming more dominating than ever. They almost always require the buyers to go thru their own lender. Here is why I feel that builder incentives are not beneficial for the homebuyers.

• The builders control the prices of homes and could offer any amount as an incentive for homebuyers to go thru their own lenders.


• Home prices of newly constructed homes are at times inflated due to the differences in upgrades between similar homes. This tells me that your neighbor might have paid more for their house only because of the improvements that are added to the sales prices. Is the amount they claim the true value of those improvements?


• Builders offer closing costs paid if you choose to go with their own lenders. Is that included in your sales price or your interest rates? Most of the time yes. Still, compare them with your conventional lenders or brokers and you will be surprised at the better services you will get from conventional lenders and brokers.


• They forced you to use their own lender in order to start the purchase transaction and reserve you a home, sort of like twisting your arm until you give up.

Now a major home mortgage industry group wants the federal government to take a closer look at these deals, calling some of them clever violations of real estate settlement and antitrust regulations. The National Association of Mortgage Brokers, the principal trade group for the country's more than 40,000 independent home loan brokers, says builder financing incentives frequently steer buyers to mortgage deals more costly than those competing, nonaffiliated brokers could provide. A delegation of mortgage brokers recently complained to the government's real estate settlement rules officials, asking for a nationwide investigation of builder incentive financing programs.

For Example, if you are offered carpet incentives, get the exact dollar amount that is being credited and get a detailed report on the cost of your rates and fees. Shop around and compare. Show your lenders these incentives. If they offered you an amount that might exceed a normal closing cost, find out where the difference is going to be applied to.

Good luck in your house hunting, I am currently involved in a non-profit organization helping homebuyers with absolute no money for down payment and closing cost. As soon as more information is available, I will write about it for our readers that might avail of such programs.

Buying Pre-constructed Homes

Buying Pre-Construction? Can your Real Estate Agent help you?

It might not seem necessary to involve a real estate professional in a transaction where a buyer can deal directly with a builder. Think again! A real estate professional representing the buyer’s interests can guide you along the right path and smooth the rough places to help ensure you make a decision you can live with (and in) for many years. Here’s how:

• First and foremost, my concern always for streamlining a transaction is your conflict of interest. If the builder (seller) is also representing you as a buyer. They will have too much interest into the transaction that might hinder their judgments into your benefits. Builders are also requiring buyers to go thru their own lending company which I believe is a big negative.


• Just as a real estate professional calls on experience and knowledge of an area to help buyers locate pre-owned homes in a community, he or she can also direct buyers interested in newly built homes to developments and communities that match client specifications.


• An agent can suggest builders based on their reputation for delivering a high-quality product, responding quickly to issues, and being financially sound.


• An agent may be familiar with how a builder prices his products and where there may be room to negotiate price or upgrades.


• Without agent representation, you are one buyer purchasing only one home. But an agent can significantly impact a builder’s bottom line by providing a steady supply of customers. The agent’s leverage may work in your favor at the negotiating table.


• When relocating to a new area, agents can be particularly valuable resources. In addition to providing local area information regarding schools, day care or elder care services, public transportation, proposed development, and so on, once construction is under way, an agent can periodically stop by the work site; supply you with progress reports, and photograph or videotape phases of the construction.


• An agent can assist you as you face hundreds of design choices and consider which upgrades could potentially add value to the home when it comes time to sell.


• An agent can accompany you at the site while you okay the plumbing and electrical locations prior to dry walling, as well as on the walk-through or builder orientation.

By now, you should be convinced of a real estate professional’s value as you search for and purchase a newly built home. You should always know and have enough knowledge of how real estate transactions are occurring on a day to day basis. Remember to trust only information that you have verified and researched. You then can enjoy individual attention and support at no cost to you. What a great way to start life in a new home!

Loan Mod Scams and New Incentives for Short Sale

Another falls for A Loan Modification scam and see how the Obama Administration is trying to keep defaulting owners in their homes.

Caller: Dear Ken, I just recently read your article about loans being in a Negative Amortization Adjustable Mortgage. I am so depress and don’t know what to do, my husband passed on and I am handling our finances by myself with two children in college. I went to a Loan Mod Company and paid them $ 3000.00 to modify my loan. I was told specifically to stop my mortgage payments and now I am 6 months behind my payments. I then was told to Short Sale my property thru the same company, because they claim that I don’t qualify for the Loan Mod. I cant sleep at night and I really am very depress and don’t know what to do.

Ken Go: For my readers, this is the first time I have had a caller sound like this, from the time I heard her voice I knew she was completely devastated. I was having diner and immediately move to another room to speak with her. This is her situation, she has a “Pick-A-Payment” Loan with a minimum payment of about $800.00 a month payment, her property is not upside down but has very little equity. She lives in a descent area that I am sure will recover faster than other cities. She is currently still working but has concerns about her mortgage recasting (adjusting) to a higher payment next year. She is also worried about her job security now. I told her that if she would have called me last year, I would have told her to keep her money and keep paying the $ 800.00 a month for now. Per advise of the Loan Modification Company, they wanted her to list the property for sale with them ( to line up more money in their own pocket if you ask me ) and if she listened to the Loan Mod company and short sales her property, she still has to pay around 1200-1400 for a two bedroom apartment. So, why sell right? My take on this is that the Loan Modification Company wants to short sale to make another commission. Not caring about what happens to the homeowners. I told her not to talk to the Loan Mod Company and gave her the name, number and address to :

Call State consumer protection agency 800-952-5225 –
You have to call FTC – to complain by phone or internet and then call Ca. State consumer protection to take action.

File a complain in writing detailing your situation with all name and company names to :

Office of the attorney general – public inquiry unit
PO Box 944255
Sacramento CA 94244 –

Shortcut to: https://www.ftccomplaintassistant.gov/

To file a complain and I gave her the number to her lenders Presidents Office to complain and ask for help.

Her two children will be graduating this year and I told her to sit them down and tell her about the financial trouble she is in. I told her to continue to payments and make arrangement with her lender to continue the loan. Because she has till next year before the loan will actually recast or adjust, for now that payment is affordable. By next year her children are both graduating and hopefully will be able to help make the mortgage payments.

Even if the adjusted Mortgage payments will be around $ 1600 a month, that should be affordable for a three income family. With the market condition now a days, she will have a nice size equity in 5-7 years and then hopefully can sell and retire.

This is a case of real abuse where as the Loan Mod company saw an opportunity to take money from this person who might not be too sophisticated or familiar with their own financial situation. Mainly due to her husband passing who was the main financial person of the household.

The crooks in this situation probably wants the property for themselves and will have no mercy or conscience in kicking these hardworking family from their home for many years, which is not underwater and has a minimum payment of $ 800.00.

Lesson learned, don’t stop paying your mortgage unless you are certain that by doing that it actually helps and not puts you in a worse situation

The Obama Administration in an effort to end the foreclosure crisis has a new approach: “Paying some of the them to leave”. This is latest program, which will allow owners to sells for less than what they owe and will them a little incentive to speed up the process. Now, there are more than five Million households behind on their mortgages and risk foreclosure. Come this April 15th, a program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to sell their houses through a process called Short Sale. Lenders will be compelled to accept the arrangement, forgiving the difference between market price and amount owed. “We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury Senior Advisor.

This process will allow the borrowers to suffer less damaging credit remarks and ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for the unpaid mortgage balance.

I will look into this new program and will be discussing about Mortgage Deficiency next week. Seems like there is a new fear amongs homeowners being foreclosed on. Which is will the lenders have the right to go after the deficiency balance even after Foreclosures? Some experts says yes and I will discuss that next week.