As a fallback position, the National Association of Home Builders is willing to accept limits on incentives builders can offer buyers that use their mortgage and title companies -- but only to keep HUD from taking more restrictive actions.
A few months ago, HUD started a Real Estate Settlement Procedures Act rulemaking process by raising concerns that homebuyers may be paying higher mortgage rates and closing costs when they use a builder's mortgage company.
In a comment letter, NAHB argues that these affiliated firms actually expedite sales and provide "substantial savings" that are passed onto consumers.
The trade group also raises objections to possible changes to the RESPA definition of "required use" that is focused "exclusively" on builders.
NAHB senior vice president David Ledford stresses in the comment letter that current RESPA rules give HUD the necessary authority to prevent abuses.
If HUD decides to modify RESPA, Ledford says, the department should consider an agreement recently reached between North Carolina regulators and builders.
That agreement allows builders to pay closing costs and discount points with the total value of incentives limited to 3% of the sales price.
"NAHB generally supports the NC agreement as a template for possible change of the 'required use' regulations with the following caveats," Ledford says. The limit cannot be less than 3% and builders can also offer upgrades.
