Well, the time is upon us, 2010 is nearly here and with it, we will see a myriad of changes in mortgage lending and the industry in general. Most importantly of all these changes are imposed by nearly exclusively by “big brother”. So only time will tell if they will indeed help the average consumer be more informed and help them to understand what fees they are paying for and whom them went to. Right from the outset, let me say I don’t think the new GFE is easier to read and understand. Furthermore, it is at least twice as long as it is now, and it seems to me and many to be twice as hard to decipher.
Now with that said let me outline just a few of the “highlights” of what the proposed “improvements” are going to require. Thanks, Federal Government, for sticking your nose in yet another industry that doesn’t need it. They take effect on January 1, 2010.
The GFE provides the potential mortgage applicant with cost details associated with closing the loan. GFEs have not been standardized and commonly they are different compared state to state and loan type to loan type. For example in Texas on a VA loan it may not look identical to let’s say a Conventional loan in California. Even after 7 years in the mortgage industry some are still a jumbled mess. Also GFEs have been just that, estimates, not an actual amount because it is nearly impossible to know what the actual charges and payoffs etc are going to be on a loan before the loan officer has the opportunity to see the “numbers”.
That seems to be a prevailing factor, that the new GFEs be accurate, or more so. Normally I would say initial GFE’s have been off by 10-15%. The new rules will create a standardized, three-page GFE and require that the itemized list of estimated fees and charges be accurate. This is supposed to make it easier for borrowers to understand what charges are involved in their proposed loans. It will allow for a very small variance in the charges.
These new rules also apply and attempt to standardize the HUD, commonly called the settlement statement. The list of actual fees and charges the borrower has to pay. The new settlement statement or HUD also will be three pages long and will include a chart on the last page attempting to show the borrower to compare the estimated charges in the GFE with the actual charges paid.
Well, that is the short of it, certainly there is more involved but you get the idea and I hope it will be beneficial to everyone.