Housing Giants - November 24, 2008 - (Page 22) f e at u r e About 80 percent of builders today are offering some kind of incentive, compared with 72 percent last year, according to an annual survey by the NAHB. Most — 65 percent — are including optional items in the home such as a fireplace or granite countertops at no extra charge. The second most popular incentive, at 63 percent compared with 59 percent a year ago, is to offer a price reduction. Whereas 34 percent home builders finance points, 7 percent match future prices and a mere 2 percent offer a car. “Seller incentives, if fully disclosed, are valid real-estate sales tools,” says John Mecham, a spokesperson for the Mortgage Bankers Association. “The trouble arises when the incentives are not well-disclosed, and thus a lender is deprived of important information when assessing the risks associated with making a specific loan.” PreSSUre ANd AbUSe As many builders begin to feel the pressure to liquidate their inventories to meet the demands of their construction contracts and loan terms, some revert to deceptive practices and fraudulent measures. Builder bailout schemes, as these fraudulent measures are known, are common to any distressed real-estate market, reports Freddie Mac in an “Emerging Fraud Trends” newsletter. “Markets, saturated by overbuilding plus an unfavorable housing climate, are generally more vulnerable. Builder bailouts can involve whole developments consisting of both completed and partially built homes, or occur when the bulk of inventory is sold but there are still unsold homes remaining,” it reports. Fraud is more likely to happen on transactions where a builder uses its own appraiser and own lending company and “They are OK as long as it is disclosed up front that [the free giveaway] is not part of the purchase price.”— Dave Muti 22 HOUSING GIANTS.11.24.08 www.HOUSINGGIANTS.cOm http://www.freddiemac.com/singlefamily/news/newsletter/2007/10/bailout.html http://www.housinggiants.com
Table of Contents Feed for the Digital Edition of Housing Giants - November 24, 2008 Housing Giants - November 24, 2008 Contents Viewpoint News & Moves Process Processes: Mortgage Check Housing Giants - November 24, 2008 Housing Giants - November 24, 2008 - Housing Giants - November 24, 2008 (Page Cover1) Housing Giants - November 24, 2008 - Housing Giants - November 24, 2008 (Page Cover2) Housing Giants - November 24, 2008 - Housing Giants - November 24, 2008 (Page 3) Housing Giants - November 24, 2008 - Housing Giants - November 24, 2008 (Page 4) Housing Giants - November 24, 2008 - Contents (Page 5) Housing Giants - November 24, 2008 - Contents (Page 6) Housing Giants - November 24, 2008 - Viewpoint (Page 7) Housing Giants - November 24, 2008 - Viewpoint (Page 8) Housing Giants - November 24, 2008 - Viewpoint (Page 9) Housing Giants - November 24, 2008 - News & Moves (Page 10) Housing Giants - November 24, 2008 - News & Moves (Page 11) Housing Giants - November 24, 2008 - News & Moves (Page 12) Housing Giants - November 24, 2008 - News & Moves (Page 13) Housing Giants - November 24, 2008 - Process (Page 14) Housing Giants - November 24, 2008 - Process (Page 15) Housing Giants - November 24, 2008 - Process (Page 16) Housing Giants - November 24, 2008 - Process (Page 17) Housing Giants - November 24, 2008 - Process (Page 18) Housing Giants - November 24, 2008 - Process (Page 19) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 20) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 21) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 22) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 23) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 24) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 25) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 26) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 27) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 28) Housing Giants - November 24, 2008 - Processes: Mortgage Check (Page 29)
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