Ed, the Mortgage Guy, is correct, and I can't make this point any better than Ed did, so I'll just re blog the post and add this comment...
Some of these REO listings that refer your buyer to make application, that purport to show no obligation, WILL ACTUALLY TRY TO POACH THE BUYER AS THEIR CLIENT, sometimes without even the knowledge or complicity of the listing agent.
That's a first hand observation, folks, so that's just one more thing you need to watch out for.
A lot of times that apparently stems from the middle man, or asset manager, who MAY just be getting a kickback from the NEW lender.
I had prequalified a couple, move down buyers, and they had been busily shopping with their agent. Out of the blue, I got this message from them:
"We have decided to buy a subdivision home and will be compelled to use the in-house lender."
Does a buyer actually have to use a certain lender just because the seller says so? Short answer-no.
Subdivision agents commonly use this ploy. They will tell you that your offer cannot be submitted unless you first get prequalified with their approved lender. Or that certain sales incentives (like cash for closing costs or property upgrades) will be offered only if their select lender is used. While this is commonplace, it is NOT legal or ethical.
Similar ploys are used on buyers who want to offer on bank owned homes. You may be told that, not only do you have to get prequalified with a certain lender, but that you also need to submit personal financial information in order to be prequalified. That's not legal either.
So what can you do if you find yourself if one of these situations and want to use your own mortgage source? First, make sure you have an agent that it is not the listing agent. Even on a subdivision purchase, get your own agent. They will work on your behalf to push back against the ploys. If the seller won't back down, move on to another property. Your mortgage could be with you for a long time; you deserve to get it through a source you choose.
"Honest Ed" Gillespie
Residential Lending for All of California
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Content in this blog is original to Ed Gillespie and does not reflect the views of First Priority Financial.
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