Being Steered By Home Builder To Preferred Mortgage Lender


Being Steered By Home Builder To Preferred Mortgage Lender

This Article On Being Steered By Home Builder To Preferred Mortgage Lender Was Written By Alex Carlucci of Gustan Cho Associates Mortgage Group

This is a topic I have very recent first-hand experience with.

  • If you have read in my last few blogs, I purchased a new home from Ryland Homes
  • I was definitely being steered by home builder to go to a “preferred” mortgage lender that they worked with
  • I already had a lender
  • The builder was so aggressive in preferring me to their builder’s prefer lender
  • Let’s get into the details shall we?

My Experience Being Steered By Home Builder To Preferred Lender By Ryland Homes 

It was July/August of 2014 and we were in the market for a new home:

  • So I did what anyone else would before committing to purchasing a new home
  • That is I went to get a pre-approval just to know what my range on a home would be
  • I called up by good friend Gustan Cho of The Gustan Cho Team @ Gustan Cho Associates
  • After a few weeks, he got me a solid pre-approval letter
  • Now what took so long was he was diligent knowing that I needed a manual underwrite under FHA’s Back to Work program
  • Neither of us wanted a surprise down the road
  • So once I got the pre-approval from Gustan Cho, I knew I was good to go
  • With this, we began to search for homes and look for something that we liked
  • We ended up finding a Spec home with Ryland homes that would be ready for delivery by the first week of November
  • Ok, great, this is a time frame we can work with, so let’s proceed

How Being Steered By Home Builder To Preferred Lender Started

Upon sitting down and about to sign the paperwork with the Sales Rep over at Ryland Homes (Jamie):

  • We were told that the upgrades/discounts that were priced into our home would not be given if we didn’t try to get approved through their preferred mortgage
  • What? 
  • How can this be? 
  • We agreed to a price and I have a pre-approval letter that will give me the comfort knowing this transaction will be done and closed on time
  • I was met with the response “well we can proceed with your route but the builder option discounts will go away and we will have to increase your price accordingly.” 
  • Wow, this was unbelievable as now I felt like I was stuck between a rock and a hard place
  • What was I supposed to do now? 
  • I knew that Gustan Cho and his team put in hours of work to get me this far, and to start over just didn’t seem fair
  • I reached out to Gustan Cho and being the professional that he is, he understood what Ryland Homes was doing
  • Although he didn’t agree with it said the following to me “Alex, go ahead and do what you have to do, but I GUARANTEE you will be back.” 
  • And with that, I started the dead-end with the builder’s preferred lender

FHA Back To Work Mortgage

Now when I talk about horrible customer service, Ryland Builders takes the cake.

  • I was very up-front with Ryland Builders that my case was a very tough case and that I already had Gustan Cho pre-approve me and I was ready to roll with him and The Gustan Cho Team
  • Since I had been through this process before, I laid out what they were going to need and what the underwriter would need to get me approved
  • I supplied them with over 30+ documents as I had supplied to Gustan Cho
  • Well after the constant emails asking what was going on, I was always met with “underwriting is working on it.” 
  • There is no way that underwriting needed 6 weeks to get my file approved
  • As the time kept ticking and my close date got closer and closer, I still hadn’t received any response from the preferred builder’s lender
  • I began to go after Ryland, since after all, this was their “preferred lender.” 
  • Finally after 2 more weeks of emailing and calling the preferred lender and Ryland Homes, I finally got a 2 sentence email from the preferred lender and it was: “Sorry, but we will not be able to get you approved with us for a mortgage.  Please seek out funding elsewhere” 

Being Steered By Home Builder And Starting Mortgage Process Over

After about 2-3 weeks of getting nowhere with Ryland Homes’ preferred lender, I knew in my gut there wasn’t a chance they were going to get me approved. Being Steered By Home Builder to their preferred lenders was really stressing me out. The Gustan Cho Team at Gustan Cho Associates already warned me about how many of their borrowers got denied after Being Steered By Home Builder to their preferred lenders.

    • I was basically telling their people the ins and outs of the Back to Work program, and what they would need to show and what Letters of Explanation (LOX) they would need
    • If anything, they should have paid me for the class and education that I gave them
    • After I got the news and knowing I had 5 weeks until my closing, I gave Gustan Cho of Gustan Cho Associates a call immediately
    • I told him that he was right and that I was back
    • Now, since so much work was done for my original pre-approval, I just needed to update some paycheck stubs, bank statements, etc. and the file was moving along nicely
  • Gustan Cho assured me that we would meet my November close date and not to stress out
  • Just as he had promised, we got the clear to close (CTC)
  • We closed on-time without any further hiccups
  • Gustan Cho of Gustan Cho Associates had came through for me, and for that I am forever grateful

Is Being Steered By Home Builder Legal?

This brings me to an even bigger issue with all of this and that is, how can these practices be legal?

  • Upon studying to become a licensed mortgage loan officer, it is pretty straight forward as depicted in RESPA that steering and kickbacks are illegal
  • I don’t see how these new home builders can all try to steer their business to “preferred” lenders and everyone knows there is a kickback going to the builders
  • This is an all too common practice that I believe gives the industry a bad reputation
  • If I did not know Gustan Cho of Gustan Cho Associates,  I would have been left without funding or a home to live in
  • These deceptive practices and holding options and discounts hostage is downright awful
  • Having dealt with this first-hand, this is yet another reason why I am so interested in this industry and looking forward to being a positive influence to everyone I work with
  • There is no room for these illegal practices to be allowed any longer and the builders need to start being held responsible for their actions

About The Author

Alex Carlucci is a veteran loan officer and a senior writer for Gustan Cho Associates Mortgage And Real Estate Information Center. Alex Passed The NMLS Exam On His First Try many years ago while working full time as an investment banker and accounting manager and being a father and husband. From the minute I met Alex we hit it off. We share all the common interests in our business goals and how we share the same goals in helping others. Alex’s first hand experience in being a borrower and dealing with various lenders has made his decision that the mortgage industry needs people like himself. Alex goal was to help folks who are just told no, they do not qualify and come back one year later when your credit improves. Our team of mortgage professionals consider borrowers who make their first contact with us our clients. We have helped countless of homeowners who first came to us with credit scores in the low 500’s or sometimes below 500 FICO credit scores. We tell our borrowers that our philosophy is not if you can get a home loan, but when you will get a home loan. We assist and advice our borrowers with credit repair and keep in touch with all of our borrowers who are in the process of re-establishing their credit to qualify for a home loan with us. If you have any questions concerning qualifying for a home loan, please do not hesitate to contact Alex at 630-915-7550 or text for faster response. Or email Alex Carlcucci at

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