I wanted to let you all know about a bill that has been filed in the Texas House that would have an effect on our business with new home builders & their lenders and get your opinion on if you support it or not. House Bill 3798(see below) would not allow new homebuilders to tie incentives to the use of a specific lender.
In light of the big news on the sub-prime front, where builders are guilty of pushing their buyers into sub-prime mortgages to the tune of 20% of all sales last year in the case of one big builder (don't want to mention names) and higher rates on prime mortgages, the builder mortgage companies are also contributing more than necessary to foreclosures and lower valuations in their subdivisions. As we know, builders have gone from offering a small incentive to go to their mortgage company to now withholding up to $25,000 in upgrades if a buyer doesn't go to their mortgage company. As a result, an unsuspecting buyer signs a contract with that incentive/penalty, after being assured that the builder's mortgage company will offer a market rate and costs, only to find out prior to closing that the rate is considerably higher than the market but they can't get out of the contract at that point - - and are stuck choosing between losing thousands of dollars on the mortgage or losing thousands of dollars of their own purchase money that was supposed to go toward the house.
I think this bill would be a huge win for the consumer and allow them to get the best lender and best financing available. The Texas Association of Realtors is not taking an official position on this bill so it is very important as individual realtors to let our legislators know we support this bill. I support this bill and have let my representative know. Our legislators see thousands of bills so it is very important they hear from us on this issue.
Obviously, the big builders have a large lobby group against this bill so it important legislators hear from us! And not all lenders are in support of this bill because some of them would lose alot of business and money.
If you are not sure you your representative is, you can visit http://www.capitol.state.tx.us/. Just put in your address and all your elected officials will come up and you can send them an email regarding this topic.
H.B. No. 3798
A BILL TO BE ENTITLED
AN ACT
relating to certain sellers of homes offering a benefit contingent on the use of a specific mortgage lender.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter D, Chapter 35, Business & Commerce Code, is amended by adding Section 35.65 to read as follows:
Sec. 35.65. SELLER PROHIBITED FROM MAKING BENEFIT CONTINGENT ON USE OF MORTGAGE LENDER. (a) A person who builds and sells a single-family residence may not offer or provide a benefit to a potential purchaser of the residence as consideration for the purchaser's agreement to use a mortgage lender specified by the person for a loan to purchase the residence.
(b) A person who violates Subsection (a) is liable to the purchaser for:
(1) any damages arising from the violation; and
(2) reasonable attorney's fees and costs.
(c) A purchaser may not waive the right to sue under Subsection (b).
SECTION 2. This Act applies only to the sale of a single-family residence closed on or after the effective date of this Act.
SECTION 3. This Act takes effect September 1, 2007.
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