Contributed by: Glen Bremer, Alpine Mortgage Planning Office: 503-718-9856
We begin 2010 with some major changes to the Good Faith Estimate and how it is used. You’ve most likely heard about the new law that went into effect January 1, 2010 stating that mortgage advisors must now honor all lending fees they quote in their Good Faith Estimate. They must also stand behind the estimates they quote for other third party fees including title and escrow and government charges – absorbing the difference themselves if it is more than 10%.
This change has served to make the concept of a Good Faith Estimate a misnomer. It is, essentially, a binding commitment.
For this reason, we are going to follow the guidance of the Department of Housing and Urban Development (who passed this new regulation) and will not issue a GFE until we have a complete loan application, including an accepted offer on a property. Instead of providing a GFE during the clients’ pre-approval/home shopping process, we will now provide a different Closing Cost Worksheet that clearly breaks down all of the anticipated costs, the rate, payment and estimated funds due at closing. Any potential buyer would likely appreciate it if they knew how much they would actually have to pay at the end of a purchase, in which regard pages like https://patmcbride.com/industrial-property-closing-costs/ or other similar pages can help as well. Once the loan application is complete and an offer to purchase has been accepted, we will then have all of the necessary figures and information to complete a binding GFE.
To make a long story very short-While clients are in the pre-approval and shopping phase of their loan, we will send them a clear and accurate funds to close/closing cost worksheet. GFEs will be sent only after a full application has been received, credit has been pulled and the client has had an offer accepted on a home.
I honestly believe that these changes will have many positive effects on our industry since it will drastically limit the ability of lenders to bait-and-switch. However, it does now require us to be absolutely certain that we have all necessary and essential information prior to issuing a GFE.
Glen BremerMortgage AdvisorAlpine Mortgage Office: 503-718-9856
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