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Builders’ incentives to buyers under scrutiny

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Federal regulators are once again scrutinizing incentives tied to the use of homebuilders' affiliated mortgage and title companies, looking for evidence that they cost consumers more than they're worth, help inflate appraisals, and lower underwriting standards.The Department of Housing and Urban Development (HUD) in 2008 proposed a ban on such incentives, but backed down last year after homebuilders sued over the proposed rule change (see story).Now HUD is asking for studies and data regulators say would further their stated goal: protecting consumers from abusive incentive schemes while still allowing affiliated businesses to offer legitimate discounts or packaged settlement services.In a June 3 Federal Register notice, HUD said it's preparing to draft new rules strengthening and clarifying an existing policy that prohibit real estate brokerages, homebuilders and others in a position to steer homebuyers from requiring that they use affiliated business. The Real Estate Settlement Proce...