contractc losing company&bank question

FarmboyBill · #1 10/12/13, 09:09 AM

My banker told me she would have to work with a certain closing company in the area of where I want to buy a farm. I want to use another closing company as my SIL works there and can get a lot done for free or for less. Called sis up with what the bank said and she said I could use any closing company I wanted. Said she would check with her boss. Yes, I said, BUT Can the bank withhold the loan cause I didn't use the company they wanted to work with? She hasn't got back with me yet.

Whats your experiences??

jwal10 · #2 10/12/13, 09:22 AM

You CAN do anything you want BUT....It may cost you more, take longer or make the banker mad. Sometimes it is better to go with the flow....James

SeanInVa · #3 10/12/13, 09:22 AM

Quote:

Originally Posted by FarmboyBill

My banker told me she would have to work with a certain closing company in the area of where I want to buy a farm. I want to use another closing company as my SIL works there and can get a lot done for free or for less. Called sis up with what the bank said and she said I could use any closing company I wanted. Said she would check with her boss. Yes, I said, BUT Can the bank withhold the loan cause I didn't use the company they wanted to work with? She hasn't got back with me yet.

Whats your experiences??

I'm in VA and my step mother owned a closing/titling company. The mortgage broker wanted me to use their affiliate or in-house guy - but I opted for my step mother, and they gave me no flak over it. I don't see how they can legally withhold the loan unless they have a specific reason (ie: your SIL's company has been convicted of fraud or something). It may be worthwhile to just call a random company and ask them on the phone and phrase it as you are shopping around.

Maura · #4 10/12/13, 09:35 AM

You don't know why they insist on using that company. It may be they have some connection, it may be just easier for them to use one company and develop a relationship. I'm sure if you tell the bank you want to use your sister's company they won't have a problem. If the person you are working with says "no", leave his/her office and walk into the manager's office and ask that person.

wharton · #5 10/12/13, 10:35 AM

I have run into this many times.

In some cases it was just familiarity, as in the lender knew that the company they recommended is reliable, and responsive.

In some cases it is a mortgage broker who I do not trust, and I'm certain got a chance to profit even further from taking advantage of an inexperienced buyer.

I bought lots of land over the years from investors who require you to use their settlement agency, or they simply won't go through with the deal. IMHO, this was done for several reasons, including the ability to not have too many outsiders getting a look at some of the shady stuff they had done, in the process of acquiring the properties.

Last, I have done a lot of business in "planned urban communities" as the government calls then, even though they are fairly remote, resort areas. These places tend to create complex settlements due to all the rules, regs. and association fees. In that case I strongly recommend that the buyer sticks with a local, competent agency I recommend, as out of town firms typically screw the deal up with errors and omissions, because they did not understand the process, and wouldn't take the time to learn how to do the work properly.

So there may be really good reasons to go with the bank's preferred agent, or not......

haley1 · #6 10/13/13, 03:28 PM

Banker getting a kick back?

Alice In TX/MO · #7 10/13/13, 07:13 PM

There's not enough money in closing costs to do much of a kick back.

Rick · #8 10/13/13, 07:23 PM

Quote:

Originally Posted by Alice In TX/MO

There's not enough money in closing costs to do much of a kick back.

There has to be some profit, and one may not be a big deal but 25 a year would.

Harry Chickpea · #9 10/13/13, 07:25 PM

Some motels also like Jane and John Doe relationships, if you catch my drift.

Ostie82 · #10 10/14/13, 12:33 AM

As a banker/commercial lender, I can weigh in somewhat. A purchase of a farm is often considered a commercial loan, particularly if the source of repayment is coming from the operation of the farm (i.e., it's not just a hobby farm). In that case, this is not considered a "mortgage" in the meaning that most above are referencing; it is not going to be bundled with other home loans and sold. Therefore, many of the mortgage regulations do not apply and you are not necessarily entitled to use whoever you want.
As for the reasoning, it most likely is because your banker has a list of "approved attorneys/closing agents". The bank has previously vetted these firms to make sure their liability insurance is sufficient to cover their transactions, they are reputable, etc. Most larger banks have a list of criteria and it takes time to vet these firms so, for the sake of time, they only use the firms on the list. As far as a "kickback", the only thing that bank may get is requiring the firms on their approved list to have an account with them. These "kickback" comments really aggravate me b/c our country has allowed the media to propagate an anti-banker sentiment and have people believe that every financial trouble in the country is due to the "evil bankers". Those that believe that are too ignorant to realize that there is a difference in your large investment banks and the banks you deal with in your daily transactions. Also, until you've worked in banking, you can't appreciate the amount of regulations, oversight and red-tape that our government has us navigate; most of which only costs the consumer more. I assure you, your bank isn't getting any type of "kickback" from loan closings.

Rick · #11 10/14/13, 05:54 AM

Quote:

Originally Posted by Ostie82

As a banker/commercial lender, I can weigh in somewhat. A purchase of a farm is often considered a commercial loan, particularly if the source of repayment is coming from the operation of the farm (i.e., it's not just a hobby farm). In that case, this is not considered a "mortgage" in the meaning that most above are referencing; it is not going to be bundled with other home loans and sold. Therefore, many of the mortgage regulations do not apply and you are not necessarily entitled to use whoever you want.
As for the reasoning, it most likely is because your banker has a list of "approved attorneys/closing agents". The bank has previously vetted these firms to make sure their liability insurance is sufficient to cover their transactions, they are reputable, etc. Most larger banks have a list of criteria and it takes time to vet these firms so, for the sake of time, they only use the firms on the list. As far as a "kickback", the only thing that bank may get is requiring the firms on their approved list to have an account with them. These "kickback" comments really aggravate me b/c our country has allowed the media to propagate an anti-banker sentiment and have people believe that every financial trouble in the country is due to the "evil bankers". Those that believe that are too ignorant to realize that there is a difference in your large investment banks and the banks you deal with in your daily transactions. Also, until you've worked in banking, you can't appreciate the amount of regulations, oversight and red-tape that our government has us navigate; most of which only costs the consumer more. I assure you, your bank isn't getting any type of "kickback" from loan closings.

You can only speak for your bank, and your bank gets a kickback- you force them to maintaint an account, or accounts at your bank.