Legal Question in Real Estate Law in Illinois

Re: Choosing a lending institute

Other than certain provisions of federal anti-trust law, I know of no specific law that prevents the builder from linking your purchase of a home from him with using his lender.

Under federal anti-trust law, if that applied in the circumstances, it's illegal to tie together a superior product available from only one source and an inferior, commodity-type product. However, the costs of bringing such a suit would likely far outweigh any potential savings from picking your own lender.

It's likely that the builder is sharing in the profits from your loan. If you truly want another lender, you have at least three choices (i) call the builder's bluff and tell him you won't use his lender, (ii) go thru with the financing and then refinance as soon as possible, or (iii) buy another house. Each course of action has its own risks, and none should be undertaken without your real estate attorney reviewing the contract and advising you in the circumstances.

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Re: Choosing a lending institute

Unless you have agreed to this arrangement (for example, in the contract you signed), your builder cannot require you to use his lender.