Can a builder hold “hostage” a $5000 credit if we do not go with their preferred lender?

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Can a builder hold “hostage” a $5000 credit if we do not go with their preferred lender?

We are having our house built by reputable builder who is providing $5000 towards closing costs and paying the title fee, but only if we use their preferred lender. The lender has inflated their lender fees, so that all of the $5000 is used up on their fees. We have 6 other lenders that have provided closing cost fee worksheets that are significantly less than the builders lender. I was told that recently something was passed so that builders can no longer hold that money if you do not go through their lender.

Asked on February 28, 2012 under Real Estate Law, Texas

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes this is called steering and they cannot do that. You need to contact the agency who regulates the builder and file a complaint. Further, contact the agency that regulates the lender and file a complaint. Someone will acquiesce and eventually you will get what you need but you need to be persistent.


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