Changes to the Good Faith Estimate

January 1st marks the start of a new year, new decade and among other things the start of a new good faith estimate.  New laws require lenders to use the 2010 version of this form.  Created to allow easier shopping for consumers, this form is 3 pages instead of 1 and does not even show the consumer how much cash is needed to close, or any credits that may be given from Realtors, sellers or the lender.  This rules are very strict as to when it must be presented to the borrower and to what fees can change after it has been given to the borrower.  In short, it is a disaster for lenders and will result in higher fees, as lenders try to understand the changes and fear they will be stuck footing the bill of estimated 3rd party fees that change or were not disclosed properly at the beginning. 

For example, let’s say a lender put a $400 fee for an appraisal and later that fee is really $450.  Basically the lender is stuck paying the difference as they had only disclosed $400.  Adding up the amount of fees that this can happen to means the lender could potentially be responsible for thousands.  I don’t need to tell you that lenders will not want to do this and therefore will be padding fees from the start.  Expect this as a new norm, at least until several loans are under the belt and lenders get used to the changes.

All lenders are undergoing training on this form and I have as well, with a 2nd session next week.  Though the above is already a conclusion taken by most lenders.  Leave it to the Government to take a 1 page form and turn it into a 3 page form, in order to make it easier, but only to make it more convoluted.  *sense the sarcasm*

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Thank you,
Matt Steinmetz
Envoy Mortgage- Voted Top 25 Tech Savvy Lenders by Mortgage Technology Magazine
2151-A2 Salvio St.
Concord, CA 94520
Phone 925-671-9501 x119
msteinmetz@envoymtg.com

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