Enforceability Status
Missouri permits builders to offer incentives conditioned on using a preferred lender, subject to federal RESPA affiliated business arrangement disclosure requirements. Missouri's mortgage lending statutes do not impose additional restrictions on preferred lender arrangements in new construction contracts.
Legal Analysis
Federal RESPA requirements under 12 U.S.C. Section 2607 govern preferred lender arrangements in Missouri. RESPA permits affiliated business arrangements provided the builder discloses the affiliation, the buyer is not required to use the affiliated lender, and no impermissible referral fees are exchanged.
Missouri regulates mortgage lending through the Missouri Residential Mortgage Loan Broker License Act (Mo. Rev. Stat. Section 443.700 et seq.) and related statutes, administered by the Missouri Division of Finance. These statutes establish licensing and conduct requirements for mortgage professionals but do not specifically address or restrict builder preferred lender incentive programs.
The Missouri Merchandising Practices Act (Mo. Rev. Stat. Section 407.010 et seq.) prohibits deception, fraud, unfair practices, and misrepresentation in connection with the sale of merchandise. This statute could apply to a preferred lender arrangement involving misleading representations about financing costs, though no published Missouri cases have addressed this issue in the builder preferred lender context.
Missouri's new construction markets, particularly in the Kansas City and St. Louis metropolitan areas, feature preferred lender incentive programs. Buyers should obtain independent loan quotes to evaluate whether the builder's incentive represents genuine savings over the life of the mortgage.
Relevant Missouri Law
Prohibits kickbacks and unearned fees in real estate settlements but permits affiliated business arrangements with proper disclosure.
Regulates mortgage brokering in Missouri, including licensing requirements for mortgage loan brokers.
Prohibits deception, fraud, and unfair practices in connection with the sale of merchandise in Missouri.
Builders in Missouri Using This Clause
What Missouri Buyers Should Know
- Compare total loan costs independently Obtain a Loan Estimate from the builder's preferred lender and at least one independent lender. Compare interest rates, origination fees, and total closing costs to determine whether the builder's incentive offsets any cost differences.
- Request the affiliated business arrangement disclosure If the builder's preferred lender is affiliated with the builder, federal law requires a written disclosure. Ask for this document and review the financial relationship.
- Negotiate incentives with your own lender Some builders will extend partial incentives even if you use an outside lender. Ask whether any closing cost contributions or upgrades can be retained if you choose a different financing source.
- Review lock-in deadlines carefully Preferred lender clauses often include rate lock deadlines and application timelines. Understand these dates to avoid forfeiting incentives or delaying your closing.