HUD looking at incentives to use builder-owned mortgage companies
December 10, 2001
By MortgageDaily.com staff
In stepping up its enforcement of the Real Estate Settlement Procedures Act (RESPA), the Department of Housing and Urban Development (HUD) is reportedly taking a close look at incentives used by builders to persuade buyers to use their in-house mortgage companies. The Detroit Free Press reported that interviews with HUD officials and private legal experts last week indicate that builder inducements to use in-house mortgage, title and other services are legal, as long as they constitute true discounts or rebates, and are optional.
The story said that under HUD's guidelines, a builder cannot claim to offer a discount for customers who use in-house services when, in fact, the savings are illusory.
Last month, as part of its initiative, HUD said that lender settlements for violations involving illegal kickbacks and referrals generated $2.25 million in payments. HUD announced in October that it would step up funding for RESPA enforcement.