Preferred lenders

I got this e-mail today from the preferred lender for Trace. I’d prefer to use my own lender but am now worried about some of the issues they mention below. Are they legitimate concerns or simply trying to steer business towards their lender?

Hello Trace Buyers-it was nice to see you all at the event a couple of weeks ago! I look forward to working with you all as you move closer to solidifying the purchase of your new Trace Loft. There are a few crucial pieces of information that you should know as you prepare to purchase your new loft.

“BE IN THE KNOW”

FINANCING

1. You should prepare to liquidate funds for your 5% earnest money deposit. If you have not already solidified funds, First Horizon can help you. We have an option for paying for your earnest money deposit. We can finance your 5% deposit by using a home equity line on your current home with no closing costs options and competitive interest rates.

2. As you move closer to purchasing your unique home, you should know that financing for your new Trace home is also very unique. First Horizon is best suited to finance your new Trace home because our bank has solidified special project financing and is exempt from Fannie Mae approval (1027 and 1028) required from most other lending institutions, especially brokers. First Horizon has set up an efficient, proven system in coordination with the developer, sales team, appraiser, title and escrow company to ensure a smooth closing for you and your family. Being the preferred lender on this project, gives us the insight that no other company can offer.

3. First Horizon is a 150 year old company with over $40 Billion in assets and as such, we have negotiated special bulk pricing for Trace. Once you sign your purchase and sale, we will be able to guide you to the right financing vehicle that best fits your needs and goals.

IMPORTANT FACTS

  • The parking may be a challenge for your non-preferred lender to finance because it may not be done for Trace lofts when you move in. First Horizon can finance your new Trace home regardless of whether your parking place is completed or not.
  • There is a $50 per page penalty for a non-preferred lender to get the project approved and $50 per day if your non-preferred lender does not close on time. First Horizon is already approved for your convenience.
  • Trace will have a temporary certificate of occupancy for this project. First Horizon can complete your financing on your new Trace home even though there is not a completed certificate of occupancy.
About Matt

Matt , Urbnlivn's publisher, has a love for lofts, floating homes and mid-century moderns.

For years Matt resisted becoming a real estate agent preferring to be an executive in the startup world but he recently caved in the spring of 2014 and became an agent.

You can also find Matt on Twitter or skiing.

  • EconE

    here’s an interesting story on the Alt-A market.

    First Horizon gets a mention.

    http://uk.biz.yahoo.com/070410/323/h4881.html

    Here is a link to their insider transactions.

    http://finance.yahoo.com/q/it?s=FHN

    they have almost 40B in assets and just a few B less in liabilities.

    sounds like they are strongarming you into using their lender by charging fees in order to use your own lender.

    Keep me posted on the loan volume that these guys are writing…I might try shorting FHN before the potentially get “acquired”.

  • EconE

    here’s an interesting story on the Alt-A market.

    First Horizon gets a mention.

    http://uk.biz.yahoo.com/070410/323/h4881.html

    Here is a link to their insider transactions.

    http://finance.yahoo.com/q/it?s=FHN

    they have almost 40B in assets and just a few B less in liabilities.

    sounds like they are strongarming you into using their lender by charging fees in order to use your own lender.

    Keep me posted on the loan volume that these guys are writing…I might try shorting FHN before the potentially get “acquired”.

  • http://www.thehighpointblog.com Robert

    1. First Horizon’s home equity lines are no different from what any other traditional lender can offer. I would say most if not all lenders will offer second mortgages (i.e. HE lines of credit) with no closing costs when you have your first mortgage with them already.

    2. This one should not be a concern. First Horizon is simply saying that since they’re the preferred lender, that they have their act together so it should be a streamlined process from start to fund.

    3. And they are special because? I can think of another company that is 150 years old and has $400 billion in assets. Wholesale pricing really doesn’t mean anything because the biggest difference in rates between all lenders on any given day isn’t going to be more than 25bps.

    With regards to the other bullets:

    -With respect to the parking spot issue; this is a lender specific issue. In my experience with lending, it hasn’t been a problem, but check with your lender.

    -These penalties almost sound like something that Trace has setup with First Horizon to discourage buyers from going with non-preferred lenders.

    -The certificate of occupancy could be an issue, but again that’s lender specific. With the few that I’ve dealt with, I had to have a completed one for final approval from our underwriters. Again though, this might not be required by all lenders.

  • http://www.thehighpointblog.com Robert

    1. First Horizon’s home equity lines are no different from what any other traditional lender can offer. I would say most if not all lenders will offer second mortgages (i.e. HE lines of credit) with no closing costs when you have your first mortgage with them already.

    2. This one should not be a concern. First Horizon is simply saying that since they’re the preferred lender, that they have their act together so it should be a streamlined process from start to fund.

    3. And they are special because? I can think of another company that is 150 years old and has $400 billion in assets. Wholesale pricing really doesn’t mean anything because the biggest difference in rates between all lenders on any given day isn’t going to be more than 25bps.

    With regards to the other bullets:

    -With respect to the parking spot issue; this is a lender specific issue. In my experience with lending, it hasn’t been a problem, but check with your lender.

    -These penalties almost sound like something that Trace has setup with First Horizon to discourage buyers from going with non-preferred lenders.

    -The certificate of occupancy could be an issue, but again that’s lender specific. With the few that I’ve dealt with, I had to have a completed one for final approval from our underwriters. Again though, this might not be required by all lenders.

  • EconE

    Thanks for the reply Robert…but don’t worry about me…I’ll do my own due diligence.

  • EconE

    Thanks for the reply Robert…but don’t worry about me…I’ll do my own due diligence.

  • Paul

    More than anything I was pissed about the tone of the mail sent by First Horizon. I don’t like feeling strongarmed into anything – they made it sound like I have no choice.

    I’ll be doing double duty to try and see if I can finance elsewhere.

  • Paul

    More than anything I was pissed about the tone of the mail sent by First Horizon. I don’t like feeling strongarmed into anything – they made it sound like I have no choice.

    I’ll be doing double duty to try and see if I can finance elsewhere.

  • Jason @ Meritage

    I don’t think TCO vs CO really matters that much. Meritage still doesn’t have CO and all of the sold units (47 out of 48 total) have closed. Actually, some people were able to close without TCO when TCO kept being delayed by the elevator.

    I think the bigger thing to worry about with a lender is if they require TCO at all to close since all new construction inevitably is delayed. Our lender required TCO which led to us having to pay to extend our lock with all the delays.

  • Jason @ Meritage

    I don’t think TCO vs CO really matters that much. Meritage still doesn’t have CO and all of the sold units (47 out of 48 total) have closed. Actually, some people were able to close without TCO when TCO kept being delayed by the elevator.

    I think the bigger thing to worry about with a lender is if they require TCO at all to close since all new construction inevitably is delayed. Our lender required TCO which led to us having to pay to extend our lock with all the delays.

  • LumenBuyer

    I am in the process of closing at Lumen and, go figure, First Horizon is the prefered lender on that project as well. I was prepared to use my own lender, but am not able to. There was a LOT of pressure from Lumen to use First Horizon, and now that I am a week away from closing I know why. I have had to change lenders to go with First Horizon and leave my lender, whom I have been working with for over 6 months now, out in the cold. Shady? Maybe. But go with the prefered lender, it just makes things easier and avoids any last minute hiccups like I am experiencing now. Their rates are VERY competetive, and they are very nice and seem to be helpful, so………….

  • LumenBuyer

    I am in the process of closing at Lumen and, go figure, First Horizon is the prefered lender on that project as well. I was prepared to use my own lender, but am not able to. There was a LOT of pressure from Lumen to use First Horizon, and now that I am a week away from closing I know why. I have had to change lenders to go with First Horizon and leave my lender, whom I have been working with for over 6 months now, out in the cold. Shady? Maybe. But go with the prefered lender, it just makes things easier and avoids any last minute hiccups like I am experiencing now. Their rates are VERY competetive, and they are very nice and seem to be helpful, so………….

  • chris

    Is First Horizon the construction lender as well? If not, what’s the developer getting our of this?

  • chris

    Is First Horizon the construction lender as well? If not, what’s the developer getting our of this?

  • EconE

    can we get a list of all the projects up there that First Horizon is the preferred lender. It would be great to know what dates they did their closings on those projects so that we can guesstimate when the rate resets will come.

    Do enough research on lenders and making money is like shooting fish in a Barrel.

  • EconE

    can we get a list of all the projects up there that First Horizon is the preferred lender. It would be great to know what dates they did their closings on those projects so that we can guesstimate when the rate resets will come.

    Do enough research on lenders and making money is like shooting fish in a Barrel.

  • jo

    I’m angry reading that email; can’t even imagine how I would feel if I was buying there.

    Talk about strong arming! $50 penalities for using your own lender? Forget that.

    I used the preferred lender when I closed at Meritage, and while he went above and beyond, I will never be using another preferred lender again. The closing fees were higher than I should have paid, and the rate is well.

    Never use the onsite lender – you can get much, much better deals elsewhere.

  • jo

    I’m angry reading that email; can’t even imagine how I would feel if I was buying there.

    Talk about strong arming! $50 penalities for using your own lender? Forget that.

    I used the preferred lender when I closed at Meritage, and while he went above and beyond, I will never be using another preferred lender again. The closing fees were higher than I should have paid, and the rate is well.

    Never use the onsite lender – you can get much, much better deals elsewhere.

  • Rachel

    I was upset by the email too. The tone is really pushy. They have always said we didn’t have to use them, but it doesn’t feel that way.

    Personally, if First Horizon gets acquired after the closing, I don’t think it affects us much. The mortgage we have now was sold witin 3 months of closing. Nothing changed but who I wrote the check to.

  • Rachel

    I was upset by the email too. The tone is really pushy. They have always said we didn’t have to use them, but it doesn’t feel that way.

    Personally, if First Horizon gets acquired after the closing, I don’t think it affects us much. The mortgage we have now was sold witin 3 months of closing. Nothing changed but who I wrote the check to.

  • LumenBuyer

    in response to Chris, I’m not sure if First Horizon is the construction lender at Lumen or not. But what I do know is that the developer and the owner of the First Horizon branch they are using are EXes, so that’s what the developer has to gain! Let her be the preferred lender and “strongarm” buyers into using her instead of alimony?!

  • LumenBuyer

    in response to Chris, I’m not sure if First Horizon is the construction lender at Lumen or not. But what I do know is that the developer and the owner of the First Horizon branch they are using are EXes, so that’s what the developer has to gain! Let her be the preferred lender and “strongarm” buyers into using her instead of alimony?!

  • LumenBuyer

    well, that’s the information I heard from a very reliable insider source but I make no claims as to its validity!!

  • LumenBuyer

    well, that’s the information I heard from a very reliable insider source but I make no claims as to its validity!!

  • Kelly

    This is all normal. Every new construction project gets a preferred lender that can waive fanniemae restrictions. Many lenders cannot finance a project that is not over 70% (+/-) sold out and/or owner-occupied. Thus why they (First Horizon and Trace) pose the threat of penalties for closing late with another lender. It is likely that another lender would have to close late in accordance with the ‘owner-occupied’ or ‘volume of units sold’ requirement by underwriting.

    That being said, the overall tone by First Horizon is a bit ridiculous. If you want to compare rates check out Jamie Porter at Countrywide (direct) – anyone that knows me knows he has been my favorite lender for the last 6 years. He can crush almost any lender. And don’t even think about getting a Lending Tree-esque online loan or hitting up a credit union… that will not fly on the Trace project. Good luck!

    – Goyer’s agent

  • Kelly

    This is all normal. Every new construction project gets a preferred lender that can waive fanniemae restrictions. Many lenders cannot finance a project that is not over 70% (+/-) sold out and/or owner-occupied. Thus why they (First Horizon and Trace) pose the threat of penalties for closing late with another lender. It is likely that another lender would have to close late in accordance with the ‘owner-occupied’ or ‘volume of units sold’ requirement by underwriting.

    That being said, the overall tone by First Horizon is a bit ridiculous. If you want to compare rates check out Jamie Porter at Countrywide (direct) – anyone that knows me knows he has been my favorite lender for the last 6 years. He can crush almost any lender. And don’t even think about getting a Lending Tree-esque online loan or hitting up a credit union… that will not fly on the Trace project. Good luck!

    – Goyer’s agent

  • Tomasyalba
  • Tomasyalba
  • GJ

    Actually all that happened was that First Horizon got out of the subprime business…just like everyone else.

  • GJ

    Actually all that happened was that First Horizon got out of the subprime business…just like everyone else.