May 26, 2018

Hopeful Buyers Get Financial Therapy from Builders

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Hopeful Buyers Get Financial Therapy from Builders

Homebuilders are conducting financial bootcamps to help buyers qualify for home mortgages. 

Builders such as D.R. Horton Inc., Lennar, and PulteGroup Inc. are offering financial programs about repairing credit scores, creating budgets, and applying for loans to hopeful home buyers who are struggling to qualify for loans nowadays. 

“These fiscal rehabs are one reason many builders are boosting sales, even though mortgage lending is tight,” Reuters reports. 

For example, builders like D.R. Horton and Lennar have employed financial advisers that are helping potential home buyers with repairing their credit and developing strategies to help raise their credit scores. The buyers who go through the “financial bootcamps” are then typically able to get a mortgage from the builders’ in-house lending connections.

Some are leery about the financial bootcamps, however. Critics say that builders are helping buyers obtain government-backed loans that require no or low down payments.

"You have people applying for loans that there's no way they can pay, but it doesn't matter because the ability to repay isn't the basis of the loan. It's the ability to pass underwriting so the loan can be sold," Brett Weiss, a bankruptcy attorney in Washington, D.C., told Reuters. 

However, builders argue that the home buyers who go through their financial programs must still meet stringent underwriting standards for the government loans, and they insist that they are not putting people in homes they cannot afford. The builders say that buyers with enough cash and income actually are able to lower their monthly housing costs by buying a home than renting, since mortgage rates are so low and housing affordability so high. 

Source: “Homebuilders Put Buyers into Credit Bootcamp,” Reuters (Sept. 28, 2012)