Ways to prevent Builders from Coercing and Steering a Loan Originator's contracted borrowers?

4 Replies

Does anyone know of some ways to prevent Builders from Coercing and Steering a Loan Originator's contracted borrowers, who they've obtained a Loan Commitment for, to their "In-House" or "Preferred" lenders?

This has been a tactic of Builder's for quite some time. A buyer comes to them to purchase a home, their "In-House" or "Preferred" Lenders can't get the borrower approved or can't offer the loan programs the borrower needs or desires, so they contact another lending source.

The other lending source is able to obtain a Loan Commitment for the borrower, then 30 to 45 days before the home is completed, the Builder's Title Company contacts the Loan Originator fore the Mortgagee Clause and then forwards this info to the Builder's Lenders.

Then, the Builder's Lenders implements their well choreographed assault on the Loan Originator's borrowers to Coarse and Steer them back to doing the loan with the Build's Lenders.

Anyone know of some ways to stop them in their tracks?

Someone emailed me an advised I send a the Builder, the Builder's Title Company and Preferred or In-House lenders a cease and desist notice informing them that a legal binding Mortgage Brokerage Contract is in effect and they can be sued for "Tortious Interference of Contract"

Can a Mortgage Broker sue a builder for such a thing?

Sure you can. Better have your ducks in a row. :)

Why not attempt to determine what the other lender is providing that your group isn't? Often times the loyalty to a lender is service, closing time, availability of information and of course Appraisals. I would attempt to identify why you can't get your share of the action and point out that steering is illegal. I would not have this as a phone conversation, I would make it personal. Just food for thought.


Please don't take offence, but that's a "Let Them Eat Cake", good in theory, but unrealistic response form someone who is Obviously not a Mortgage Broker and has never had to deal with the Builder's or Builder's Lenders relentless efforts to Coerce and Steer their client.

I could be beating them in rate and in closing costs, but when their title company feeds the Builder's insider info as to what lender I'm using and then they come waiving $7,000 in builder credit to pay closing costs and/or home upgrades, client loyalty goes out the window!

I'm assuming you are a realtor, so let me give you a comparison scenario:

....As a Buyer's Agent, you have an executed and consummated deal on a 300k purchase paying you $9,000, but your buyer is contacted by another realtor who says they will offer them a $7,000 Real Rebate if them kick you off the deal and allow them to get on the deal.

Now, tell me what you would do...if such a scenario could actually happen to a buyer's agent.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here