Toll brothers and lost deposits (real estate, mortgage, loan)

[bande1102]

Wow, this is crazy and I had no idea that this was even possible. Short story: Toll brothers (custom home builders) apparently offers custom homes to people who are then encouraged to obtain a mortgage through their mortgage company. Problem is, they'll never qualify the mortgage and then lost their downpayment and the house. Quite convoluted and there is a breakdown of the contract within this story. The whole story is sickening.

Taking a Toll: Why Home Buyers Say They Lost Their Life Savings When Trying to Purchase Homes | NBC4 Washington

[S1968]

How awful is that! I thought Toll Bros. was a reputable company. Now they have reverted to stealing people's life savings. And they continue the practice after settling a class action lawsuit. Really skeezy!

[cjmeck]

Absolutely ridiculous. I cannot imagine what "losses" they've possibly incurred to account for them seizing a deposit!

[bande1102]

The thing that really got me is that (according to one of the links) Toll Brothers made most of their money from those deposits--not their houses.

[pokeable]

Will play Devil's advocate:

Why put money down for a deposit for a new home, when you don't have an idea in regards to your financing? We bought our first place in our 20s (definitely a learning experience), and we wandered around looking at homes with our pre-approval cert.

Heck our current place we had a pre-approval letter, and our realtor wanted confirmation from our lender when we went above our initial budget when making an offer (to humblebrag, our lender snickered because we undershot what we could afford by quite a bit).

[psusra112]

Originally Posted by pokeable

Will play Devil's advocate:

Why put money down for a deposit for a new home, when you don't have an idea in regards to your financing? We bought our first place in our 20s (definitely a learning experience), and we wandered around looking at homes with our pre-approval cert.

Heck our current place we had a pre-approval letter, and our realtor wanted confirmation from our lender when we went above our initial budget when making an offer (to humblebrag, our lender snickered because we undershot what we could afford by quite a bit).

Having walked into, and walked out of a Toll Brother's office (among other new builders in MD), they lead you on into thinking that you've been "pre approved" when you fill out their application. If you're not working with an agent, or a first time homebuyer, it's probably pretty easy to end up in a situation where you're being mislead.

[pokeable]

Originally Posted by psusra112

Having walked into, and walked out of a Toll Brother's office (among other new builders in MD), they lead you on into thinking that you've been "pre approved" when you fill out their application. If you're not working with an agent, or a first time homebuyer, it's probably pretty easy to end up in a situation where you're being mislead.

Again, though. Why even look if you don't have your finances in order first?

[psusra112]

Originally Posted by pokeable

Again, though. Why even look if you don't have your finances in order first?

I -was- pre-approved by a mortgage company, however, if I wanted to get the "extras" (Because they 100% will not budge on price-of-house), I had to use their mortgage company. Their mortgage company won't give you a pre-approval without signing the contract (which is why we walked). Folks are getting swindled because by the time the mortgages are denied, they're stuck either paying 60k in "upgrades" to Toll and using their original pre-approval or getting boned by having their deposit taken because their original non-toll pre-approval didn't cover the price of the house and the upgrades (Mainly, because the house wouldn't appraise for the needed amount for the loan) OR getting boned by an astronomical interest rate.

[pokeable]

Originally Posted by psusra112

I -was- pre-approved by a mortgage company, however, if I wanted to get the "extras" (Because they 100% will not budge on price-of-house), I had to use their mortgage company. Their mortgage company won't give you a pre-approval without signing the contract (which is why we walked). Folks are getting swindled because by the time the mortgages are denied, they're stuck either paying 60k in "upgrades" to Toll and using their original pre-approval or getting boned by having their deposit taken because their original non-toll pre-approval didn't cover the price of the house and the upgrades (Mainly, because the house wouldn't appraise for the needed amount for the loan) OR getting boned by an astronomical interest rate.

From the 1st and only time we bought a new place, the home had a base, list price. We were told up front how much "upgrades" (granite, hardwood, recessed lighting etc etc.) would be, and with the new price, discussed financing. No one put a gun to your head to get "upgrades" at the time of the build. You could get them after close on the 2ndry market.

If Toll would not allow you to add upgrades without using their in-house lender, that is a cheerful ground for litigation (google Craig Northrop's legal problems in MD). However, if your pre-approval lender would not up the amount they would lend to you, the onus is on you and your tastes.

[Brave Stranger]

Originally Posted by bande1102

Wow, this is crazy and I had no idea that this was even possible. Short story: Toll brothers (custom home builders) apparently offers custom homes to people who are then encouraged to obtain a mortgage through their mortgage company. Problem is, they'll never qualify the mortgage and then lost their downpayment and the house. Quite convoluted and there is a breakdown of the contract within this story. The whole story is sickening.

Taking a Toll: Why Home Buyers Say They Lost Their Life Savings When Trying to Purchase Homes | NBC4 Washington

Just happened upon this....it's mind-blowing If you could re-post this in the real estate section on CD I would love to see the reaction over there from the professionals on that board. Thanks.