JDPower: Consumers Like Builder-Lenders

Despite charges of improprieties against builder-owned mortgage companies -- and a federal investigation into the practices of at least one such firm -- borrowers themselves are generally satisfied with their builder-lenders.According to a new J.D. Power & Associates survey of new-homebuyer satisfaction with their builders, the majority of those who obtain financing through builders do so because of competitive rates and because the processing is more streamlined. "They are more satisfied than when they use direct lenders, and that makes sense," said Paula Sonkin, vice president of the real estate and construction industries practices at J.D. Power. "When loan officers work for the builder, they can more easily coordinate the entire experience." The study also pointed out that builders offer price reductions, lower rates, and other incentives to attract buyers to the in-house mortgage operation. But Marc Savitt of the National Association of Mortgage Brokers said that's how many buyers are taken advantage of. "There's nothing for nothing -- there's no free lunch," the NAMB's president-elect said. "The incentives are illusionary. People don't understand that in most cases, the homebuyer ends up paying for his own incentive in the form of higher rates and closing costs." The West Virginia broker said the whole idea of offering incentives is to prevent the borrower from shopping around.