New Good Faith Estimate 2010 Form #2

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New Good Faith Estimate 2010 Form #2

In my introductory Post to the New Good Faith Estimate 2010 Form, I left out a three important things that the New Good Faith Estimate 2010 Form does not include, they are:

It includes the Principle & Interest, PMI, or FHA MI in the monthly payment, but it does not include the Taxes, and Homeowners Insurance in the monthly payment.
It does not state the Loan Program being applied for.
Even though the New Good Faith Estimate 2010 Form shows the total Costs, it does not give an estimate of how much money the Borrower is expected to bring to Closing. Example of this is that Seller Paid Contributions are not included on this form, so they are not reduced from the Total Costs.

Today what I want to do is to list the three categories of costs that may or may not change once the New Good Faith Estimate 2010 is issued. These three categories are costs that Cannot Change, cost that Can Change by 10%, and costs that can Change at Settlement.

Costs That Cannot Change (0% tolerance):
- Origination Charges.
- Credit or charge (points) for the specific interest rate chosen (after the rate is locked)
- Adjusted Origination Charge (after the rate is locked)
- Transfer Taxes.

Costs That Can Change By 10%:
- Required Services that the Lender Selects.
- Tile Services or Lender's Title Insurance (if the Lender selects them or identifies the companies)
- Owner's Title Insurance (if the borrower uses the companies the Lender identifies)
- Required Services that the Borrower can shop for (if the borrower uses the companies the Lender identifies)
- Government recording charges

Costs That Can Change At Settlement.
- Required Services that the Borrower can shop for (if the borrower does not use companies identified by the Lender.
- Title Services and Lender's Title Insurance (if the borrower does not use companies identified by the Lender.
- Owner's Title Insurance (if the borrower does not use companies identified by the Lender.
- Initial Deposit for Borrower's Escrow Account.Daily Interest Charges
- Homeowner's Insurance.

My next Post will further explain some of these charges.

Links to the other blogs in this series:

New Good Faith Estimate

New Good Faith Estimate #3

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by George Souto on 01/05/2010 07:12 PM

Comments (29)

Good Faith Estimate 2010 in the Mortgage / Finance Channel

new good faith estimate 2010

Originally posted at: George's Blog: New Good Faith Estimate 2010 Form #2

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29 Comments on New Good Faith Estimate 2010 Form #2

JAN

2010

George

Lots of major changes coming in our Industry.

I need to read this over again...and let it sink in. As always, you have great info. Now to catch up on the others :)

Tom you are right and there are no signs of them slowing down.

Sally have you identified any "hoola's" yet :) :) :)

Thanks George,

The only problem I see is with expired locks!

A lot of fools are going to lock short and refuse to eat the overages. I see them turning down loans then trying to start over. This seems so good, but misses the mark.

Bill

George,
thanks for the heads up , I always love to learn more about the new changes in the mortgage industry ! :)

JAN

2010

Thanks for posting to our RESPA group George. As I gain experience actually using the new form, it's relatively simple - and therein lies the problem - it is too simple and has all the shortcomings that many of us have been pointing out.

Costs That Can Change By 10%:

Required Services that the Lender Selects.

What might these be???????

I always prepare a detailed Buyer's Estimated Closing Cost for my home buyer clients so there won't be any surprises for us. However, how many agents do???????

Bill I agree it does miss the mark. I understand the intent, and they have made some head way to achieving it, but this does not completely do what they wanted it to.

Ray, thank you for the kind words, I will try to keep the information coming.

Lenn, the two services that would fall into this category for us would be Appraiser, and Attorney. We have a closed Attorney's List, so an Attorney on our list has to do the Closing Packet, but the Borrower can choose a different Attorney to do the Personal Representation.

Rick sorry I skip over you. You might be right. We use Calyx so almost every think populates over from the old GFE which we are use to using, so for us it is also easier than it initially looks.

George-

Also don't forget to mention that the sales price does not appear anywhere on the GFE. I enjoy your blogs and I hate to sound so negative about this but it is frustrating is that they spent 2 years on this and didn't even come close to something that everyone raves about. By the way, the HUD commonly asked questions on the new issue is now at 59 pages long. Expect many more. Does anyone know of a contact at HUD to send letters or email to voice our opinion on the forms?

Thanks!

Great Blog, I can't believe that you "CAN NOT" give a prospective buyer a good faith estiamte until they have a property. Now what ever you do do not allow them to give you the address until the offer is excepted. Crazy Crazy

its gonna be awhile before everyone gets used to this new
GFE

George.. I'm glad to see you are taking the time and patients to explain this to us. Congrats on the *feature*... you might want to change *(pints) to (points) under "Costs that ccan not change".

valerie osterhoudt

George I spoke with some agents today who have not even look at the forms. I will certainly refer them to your post.

Congrats on being featured.

I'm hearing Loan Officers complain about these new GFE's daily.. One said today that if is taking about 2 hours just to get it ready !

JAN

2010

George,

Here in FL the title service charges are usually pretty low now...occasionally I have to negotiate with them to lower a few of their costs as other companies charge lower. It's rare these days to see them overly high....and from what I've been told by a few title agents is that now they must lump it all in one fee. Title insurance should also be at the lowest promulgated charges. Luckily my clients haven't been hit with a few of those padded fees. Title companies make their money on the title insurance and although people from out of state wonder if this fee is bogus...it does protect of they try to sell it later and they find out that the other title company didn't do the proper check and a cloud shows up...then they must cure it for free as this is their policy at work.

George, nice series of posts. I am a real estate closing attorney and I and others are really concerned that the RESPA changes are giving more power to the lenders to select settlement providers. For instance the typical title or closing services are subject to the 10% variance in your case, you provide an amount and a privoder or list of providers. Since you have a closed list, that really prevents the borrower from shopping for that service. I understand that the bank rep is really for the protection of the bank, but it is paid for by the borrower. In essence it seems that you are really deciding what the third party can charge for that service (although in reality this is probably not much different than before since I am sure you said to be on our list you have to agree to charge 'x'). It seems to me that the new RESPA increases the power of the lender to select third party providers, when one of the purposes was to increase the ability of the borrower to compare and select services. We shall see how it all shakes out.

Paul-

You concern is a valid one. Not to step on George's toes in his blog, but the reason behind lenders having to provide the settlement providers list, is for the consumer to shop. We have to provide them the "option" to use them. They have the right to use whoever they choose. Lenders fall under the 10% tolerance if they choose the provider on the lender's list. If the borrower chooses a title company not on that list then the lender is not subject to the tolerance. We are all having to learn this in a short period of time. It is hard to change a 35 year old practice in such a short period of time. We all have to work together and hope that this gets modified in the near future.

I wonder if there'll be a 'moratorium' on this in March.......

Reblogged #2 too. Thanks George. This is so simplifying for clients...

Chris I wish I had a phone number to give you but I don't. If I learn of one I will pass it on.

Jena, Crazy is a very appropriate word.

Gene, I have been working with it for a week and I still have to hit the drop downs to try to figure out what is bundled in the costs. It is nuts.

Valerie thanks, I went back and made the change :)

Jennifer thank you :)

Rolland we use Calyx and it fills in the figures pretty quick, but trying to explain what is bundled in each group of costs takes longer to explain to the Borrower and to make sure they understand.

Neal, title is an issue, but this new GFE has bigger issues and a lot less transparency.

Paul, I understand your concern, but that is one area that the new GFE did not change. The level of control or lack of control over the selection of providers remained the same.

Chris thank you for the added explanation.

Tamara if I had to make a guess I would say that will not happen.

Erica thank you again :) :)

This will be good to use in our agent training... do you mind if i use it for that George?

JAN

2010

You are welcome George. I also have noticed what other lenders are using as far as software goes. We use BytePro and it seems to handle pretty well. When we print our good faith estimates, we are also printing a "closing cost estimate" which is just our old good faith estimate printed out in the line itemization form. This is what we will be using to explain to our borrowers in conjunction with the gfe. It will be confusing to the borrower that signing a required form without all the "facts", and some might even be hesitant to sign.

As for phone numbers, I don't necissarily need one but at least an email address, but I think HUD's website gives you the option to email officials that work there. I will research that and post it here. I believe that if we let our voices be heard loud enough that a push for change could be in order. Sort of like they did for HVCC. I am sure if thousands of lenders, brokers, and title companies send enough complaint they should have no choice but to listen.

Anyone up for starting a petition? Sign me up!

I went to HUD's website to find out how to contact. You can contact any of the key HUD employees especially HUD Secretary Donovan.

His email address is Secretary.Donovan@hud.gov

I am sure it gets filtered so be careful about sending with attachements.(they have guidelines for this)

I encourage all lenders and real estate agents to contact him as much as possible and voice your opinion, provide facts of the this new form and push for change. I have sent emails to the FHA resource senter and awaiting a response. I will be preparing a thorough explaination and documentation to send to Secretary Donovan to see if a response will be returned. I know that it is only 1 week into the new gfe, but it does no justice to the consumers.

Thanks

Diane, yes you can, and I would be honored if you did.

Chris we use Calyx and in Caylx we now have a new form called "Initial Fee Worksheet" which is also just the old GFE re-named. That will be what we will be giving if someone who is just shopping asks for a GFE.

And thank you for the contact info.

JAN

2010

Thank You George! I will let you know the outcome!

JAN

2010

George,

Thank you. This is in such a good format and so easy for clients to understand that I have to reblog again.

Diane, feel free to call or e-mail if you require any further explanation.

Judi, and I thank you for doing that and helping to spread the word on this.

FEB

2010

Hello, and thank you for your blogs on this confusing Good Faith Estimate.

I worked for a company that used two different systems to enter the information in, and with out proper training and and systems that work, alot of times we've found ourselves to get frustrated. I neeed this information a couple weeks back when we were struggling with trying to get fee's to match. It's good for a borrower to know as well. It's a helpful learning tool. We could NOT send GFE's out to the borrowers, unless the broker sent them into us and then decided to lock the rate, however that doesn't always mean the information that they disclosed matched what we would disclosed. The whole issue with that is disclosing improper information. I am going to continue to read over this info and hopefully learn what I've missed!!

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George Souto

Middletown, CT

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