My column for the February issue of Builder & Developer magazine is now posted online.For this issue, entitled "The New Qualified Mortgage Rules," I wanted to cover how the new mortgage rules could impact the building industry, especially for those builders with in-house or related mortgage, title and escrow operations. An excerpt:
About 20 years ago, it was fairly common for home builders to have close relationships with outside mortgage lenders. This was done for two reasons: to streamline the financing process for their buyers and to bolster their competitive position by offering various incentives for using these affiliated lenders. Throughout the 1990s, most large builders figured out that bringing these operations under the corporate umbrella — including in-house title and escrow services — could make the process even more efficient, while also adding more revenue streams to the bottom line.
However, with the latest rules released by the Consumer Finance Protection Bureau (created in July 2011 as part of the Dodd- Frank Act), the existence of these in-house affiliates are now in jeopardy. In the original Dodd-Frank Act, the total sum of fees and points that lenders could charge consumers was capped at 3 percent of the loan amount. What the latest rules make clear is that this 3 percent will also include services such as title insurance, settlement costs, inspections, and escrow services when the provider is owned by the lender or part of the same corporate umbrella. These new rules are expected to take effect in early 2014.
To read the entire February 2013 issue in digital format, click here.
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