January 20, 2010

The New Good Faith Estimate, part 1

The mortgage industry is … in the words of Elvis … “All Shook Up” over the new Good Faith Estimate that become the gold standard on January 1, 2010. So what’s the hoopla you ask?

It’s not the fact that a one page form is now a three page document. I actually like many features of the new GFE and think consumers will too.

It’s not even the additional areas now required to be disclosed. I’ve gotten used to change.

The problem is … HUD & RESPA have dropped this regulatory ball in our laps without regard to the fact that it doesn’t play nicely with the other disclosures they require us to provide borrowers like Truth-in-lending, APR and California’s Mortgage Loan Disclosure Statement. There are parts of GFE 2010 that have everyone from bankers, brokers, lenders and their compliance departments in total disagreement on how to implement. Getting it wrong can blow up loans so everyone is being extremely careful. I’m glad to be associated with the largest mortgage brokerage in the country, First Priority Financial, who is taking a lead role in bring these short comings to the attention of HUD and RESPA. As a result, improvements are on the way.

In my next blog, I delve into what I like about the new GFE and what borrowers can expect when it comes to understanding the costs associated with getting a home loan.