I have found corporate owned properties (REOs) want the buyer to be pre-approved with their lender. Some have offered incentives to have the buyer apply for the loan with their lenders. Many times they are happy to simply know the buyer is approved with a "legitimate" /established lender.
As far as legality? Hmm...but they obviously do not have to accept any offer they do not want to. On the other hand - it is the listing agent's job to sell the home. There are strict RESPA guidelines about their being "incentives" with lenders (kickbacks etc). If I were you, I would challenge it with pre-approval from the lender of YOUR choice in hand.
Yes, it is legal for them to ask you to pre - approve with their designated loan agent.
But the law says that they CAN NOT require you to use him.
The way I handle it is to have my loan agent cross qualify with their loan agent. This way you don't have to have your credit run each time you make an offer.
Also it is easier because loan agents talking directly to one another speak the same language.
Andy, I hope this helps you.
As far as the legality of this....you would need to refer this to an attorney. However, as previously mentioned, many banks are requiring pre-approval from their bank for REO's.
This is done to minimize the risk of the buyer backing out of a transaction because of not being approved for funding. They will know up front the financial capability of the customer.
As always, if you don't like the way something feels, you can always look elsewhere.
The "Eckler Team"
Ron and Debbie Albert
Coldwell Banker Residential