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Love your post and completely agree with it. I'll go ahead and Re-Blog it. Via Larry Bettag - Cherry Creek Mortgage:
It's official:
The New Good Faith Estimate is causing real pain to
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The Consumer and;
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The Real Estate Industry
I've now spent two months working on this new good faith estimate. It's been implemented since January 1rst of 2010. So, without further adieu.....what is the problem with the new Good Faith Estimate?
THE CONSUMER
First, let's call it like it is. The government wanted to create a "new and improved" Good Faith Estimate that is "user friendly, easy to read, and would promote a fairness in comparison shopping for the consumer." The consumer would be able to shop one lender against the other with such clarity that the Obama administration fully believed that the consumer would get better, clearer information and that the consumer would save about $700 per transaction.
THE RESULT?
1 The new Good Faith Estimate (or GFE) is anything but clear. Fortunately lenders are using the initial fees worksheet in conjunction with the new GFE. The New GFE is three pages long and discloses EVERYTHING, EVEN IF IT DOESN'T APPLY TO THE BORROWER. For example, the lender needs to disclose the title insurance in a purchase transaction even though the buyer doesn't pay for it in Illinois, the seller does. The title insurance becomes a "cost" disclosed to a borrower....but it is not a cost incurred to the borrower. The same can be said with most transfer taxes in Illinois. State and County transfer taxes are paid by the seller. Some munipalties have transfer taxes as well. Needless to say,
2) It is much more expensive for the consumer under the new Good Faith Estimate law for two reasons:
- There are different categories on the good faith estimate. If the lender makes a mistake in certain categories, the lender eats it 100%. There are other categories with variances, but let's say that a lender fails to disclose a transfer tax that is charged to the seller, the lender eats 100% of it. It could be $1,500 up to $3,500 dollars. With a mistake like that looming over every lender, a smart lender will charge an extra few dollars to absorb mistakes on the loans that they don't get it right;
- It's so much more difficult to get a loan done from start to close. Ridiculous really compared to what it was. Sure it should be tighter, but it's so tight that all a loan officer does is look for ways to make things more palatable. Slam dunks? Few and far between. With more to do, lenders are not goint to want to be paid less. They are closing less, but their family expenses having gone down one bit. The cost to manufacture a loan is the same as always. With less loans closed per loan officer, invariably the costs need to go up. I just reviewed a Good Faith Estimate on a no cost refinance from Bank of America where the charges are just over $12,000. Wow!
FREAKS THE CONSUMER OUT...
WHEN THEY SEE HIGHER CHARGES THAN THEY'RE ACTUALLY PAYING.
Currently, I have a borrower who is buying a home with zero down payment. Needless to say, I have to approve the borrower by verifying over $8,000 of funds, when, in fact, the borrower only needs about $3,500 dollars to bring to closing. Getting this borrower approved has been rough because the borrower has to now play a game and show more funds than they'll need at closing because the government wants it that way. Can I say...."Where is the Truth in our Lending" anymore?
OUR INDUSTRY
This one is short and sweet. It basically cheapens our industry. The government has overcorrected for the actions of a few. The government should have prosecuted and punished those who were criminal. They didn't do so until there was a public outrage. Now, as a result, the government is punishing the industry, and, as a result the consumer who is supposed to benefit as a result of the new legislation.
Great loan officers will calculate for a borrower what he or she needs to bring to closing. If the good faith estimate is so far off, the loan officer will say,
"here's exactly what you'll need to bring to closing. "
"I know Mr. Borrower that the good faith estimate says our closing costs are X,Y and Z, but really they're not. You see that the seller's charges are on here. Transfer taxes are on here."
BORROWER: "Yeah, but your good faith says...blah, blah, blah."
Loan Officer "Just trust me."
Thus giving birth to the "Used Car Salesman"..."Just trust me"
Are you kidding me? We're supposed to be trusted advisors not sleazy used car salesmen. I'm not a used car salesman. But here's another conversation that I had with a realtor. I work with a Re/Max agent who is in the top 1% nationally.
Realtor: I got a call from Joe blow. He's confused on the fees.
Me: I know. I just got done meeting with him. I went through the good faith estimate and told him that the new government forms suck.
Realtor: Well he's concerned because it says that he needs to bring in $11,000 to closing.
Me: I know, but I calculated it out and he's really only bringing in just under $3,500. Blah, blah, blah.... (I'm now back to just trust me). GROSS!!!!
My trusted referral partner now has to hear the "pitch" from me, her 15 year partner in the business.
Normally I'd say that the Jury's still out, but in this case, the jury has returned, really quickly. The law has good intent, but the results? I'm sorry, but the results of this bill is a resounding guilty.
There are ways around showing the client the new Good Faith Estimate. I have spoken to folks who are legally getting around going through all the headaches of this bill. What they're doing is legal, but it' skirting the intent of the law. I guess my bottom line is this. Fix the bill before someone gets hurt. In this case the someone's are consumers, realtors and lenders....as well as our economy.
Larry Bettag - Regional Vice President, Midwest Region
Illinois FHA Specialist
630-417-7172
  
An Illinois Residential Mortgage Licensee
1) As far as NAR... it's politics.. I agree it's monopoly..I have decided not to join NAR this year ,I felt that it's a waste of money. Sitting in class for a few hours every 4 years to take the Ethics class does not make you have a better work ethics - you either have them or not. I don't have a single Buyer or Seller that came to me or chose me to represent them because I am holding a designation or belong to the Board of REALTORS. All of my clients are coming from Referrals from Past clients. When you join a Broker you are required to join NAR if your Broker is a member ( it's not a choice).
What else you get from NAR a monthly magazine full w/advertisement...
2) As far as what an Agent is doing for their client ,I don't thing we are overpaid- I have created a list of all the things we are doing on behalf of our clients - for example the Check List came to 100 different Tasks that an Agent will do from taking the Listing or Buyer to Closing ( CMA's,marketing/showing homes,scheduling appointments,checking availabilities,disclosures legal paperwork,follow up calls, feedback on showings, contract negotiations, follow up , follow up, follow up, tons of hours on the phone,facilitating the transactions with all parties involved( attorneys, inspectors, buyer?listing agents,lenders,clients,etc) to make my client aware of what we are doing that the public don't see us doing.
3) As far as Education - Yes, it will take you a few months to get licensed but this class won't teach you how to Sell real estate. a new Licensee has no clue of what to do or not to do.. That's why you need to take as many classes and training as you can, close a lot of transactions in order to learn the Business. Experience is the Key, you are learning something new from each transaction you close, so you can see things coming once you see the Home with the next client you have.
4) I think the Buyer Agent is not overpaid at all esspessially if you work with a First Time Home Buyer( 95% of my buyers are First time Home Buyers)
A) need to educate them what to expect, how it works
B) Qualify them for Financing
C) Educate them on Areas
D) Dig and Research Schools, area Info, etc
E)Schedule Showings, Check availabilities, Give a feedback to Listing agents
F) Drive ,Drive,Drive
G) Qualify the Home(when found) to see if it qualify for their financing ,especially if it's a foreclosure
H) Prepare CMA for the last 6 months or more, get Tax Info, anything else you can get, Prepare an offer, negotiate an offer, Dealing and Educating the Buyer if Multiple Offers ( very often in today's market w/REO properties).If Short Sale- educate them, set up expectations.
If it does not work. start over again.... If it the property is Under Contract - schedule, Inspections, Appraisla, Closing, Follow up - Attorney,lender, Inspections, Listing Agent, watch the deadlines, contingency period, make sure everybody involved is doing what they supposed to do in a timely manner, so you don't sacrifice your client earnest money, answer ??, educate, educate, talk on the phone, talk on the phone.
5) In Regards to
"I don't think any buyer had a gun held to their head when being told to sign on the bottom line for a "liar loan" or a "pick a payment" neg am loan."
I don't agree with the above.
We have duties to our clients. Think in a long term, this Buyer will become your seller/client in a future. Are they going to call you if you did not care ..I have personally sat down with my clients and caution them if they want to take the road of getting a sub-prime mortgage. Each Buyer has been given a several financing options 30yr fixed, Interest only, 5yr fixed, 10 year fixed based on their Financing situation. Nobody knew that today market will come around the corner and we were overpaying for houses but I was always felt responsible to discuss w/clients the Good and Bad and looking for my their Exit strategy few years in a row., because they will call me and than what I will say?!
6) I also agree that it's a Free Market. Everybody has the choice to decide if they are to use a Realtor or not based on theirs comfort level. If you sold a few houses already , if you know what you want to Buy, if you educated yourself well with the market area,the process of Selling or Buying, if you have the time to spend calling, scheduling appointments to view homes at different times,know the terms of the agreements, know what you are doing... why not you can do it. If you are a Seller, price your home right, know the process, market it well, even if you like to pay the Buyer's agent you can have it on MLS for a Flat fee, if you need some help you can use a Realtor as a transaction Broker for a Lower Fee. Finally the Commission is negotiable. I have created a different commission plans to meet everybody 's needs - from Flat fee to 6% Commission ( 3% of course is going to the Buyer's Broker) based on what the client's needs.
Via Karen Parsons-Fiddler (Great Western Realty Group):
Anti-Realtors! We've all seen them! They lurk in the shadows of Zillow and local newspaper real estate blogs waiting for a new post or article by a Realtor so they can pounce on the comments section. The intent is normally to scare potential buyers and sellers from using a Realtor. They do this through intimidation...they position the potential client as an "idiot" if they don't handle their own real estate transaction and are "duped" into using a Realtor.
It's too bad...since those of us who are professionals in the Real Estate Industry know how much work and expertise goes into navigating a transaction to a successful close. Perhaps it's the very reason we are considered and "extra" and not a necessity....we take care of so much behind the scenes without concerning the client that they never know all that we do! Hmmm....hadn't thought of that!
Last night one of the Anti-Realtors surfaced on a post of mine here on Active Rain. Realtors Were NOT Part of the Real Estate Problem . In this case the author felt that during the "boom" listing agents were ok but that buyer's agents were at fault? What? Apparently buyer's agents should have known that the prices were unsustainable and so by allowing the buyers to buy.....they were the problem!
Ok...so taking that same logic, here are some more people to blame for the bad economy. During the "boom":
1) Contractors and Sub-Contractors should have turned down all remodeling jobs since these jobs would be cheaper in the coming years when they have no other work.
2) Car Companies and Dealers should have closed their lots for a few years since the economy was going to drive prices down. In addition, the car companies are going to offer to pay the car payment if they run into trouble..better wait for that plan.
3) Gas Stations should have stopped supplying the pumps since the gas prices were going to fall to around $2/gallon and that will be a much better time to fill up your tanks.
4) Electronic Stores should have put all TVs in the back room for a couple of years since the Plasma TVs are going to be very inexpensive in a couple of years.
5) Internet Retailers should have shut down their sites for a few years so that the walk-in retailers can get their fair share now...and then when the economy stalled and sale tax rose...they can take their profits later.
6) Pool Guys, Cleaning Services, Gardeners...what can I say? How could you charge so much for your services when they are going to be almost half that price in a couple of years? Why didn't you charge us the least you possibly could in the first place?
The list goes on.....I'm sure you have some to add! The point is.....WHAT? Things happen and if the Real Estate Industry is the one who holds the Crystal Ball....then I want mine!
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We are pleased to announce the opening of our New Brokerage Company which is operating in metro Atlanta Area . We invite all experienced agents ( with at least 5 closed transactions ) to join our team. We are offering 100% Commission Plans and Simplified Office Procedures, no Board Dues,no Junk Fees,no minimum commission requirements(after all the commissions are negotiable), even we'll allow to offer a flat fee listings.Right now we are members of FMLS First Multiple Listing Service but are open to join other MLS's if our agents are interested to join.Remember FMLS only charges a fee if there is a closing , the rest of the MLS's require a monthly fee.Find Out exactly what we are offering here.
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Violeta Marinova
Lilburn,
GA
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E-Realty Brokers,LLC
Office Phone: (678) 380-5794
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