Blown Good Faith Estimates

Morgan..... okay... understood. But you should put that in this post, because it's misleading to the general public. Just as you said that this lender was misleading this client.  In all honesty, it's the same thing.

2nd... you circled the rate on the GFE and said no way. I can do an FHA loan at 4%.... but it's a 1 yr adjustable. So, as I stated, these rates do exist.

Last....  your one comment about the YSP has to be shown. This is totally incorrect. If you are a banker and if you are funding this loan, then this still doesn't have to be shown. AT my last company, we even funded these types of loans if we wanted to. 

Trust me, I agree, some GFE's are terrible. But without you disclosing everything you knwo from the client, how can we determine what you are talking about is accurate?  That was my main point. Thanks for answering my comment. 

Morgan,.... I read your comment to Jacob, in regards to junk fees and such. This si what you said to him... 

Again, as I was saying above, the point of the Junk Fees section is that the customer should be wary of additional fees showing up at the end that are not properly disclosed on this section of the GFE.  and  I was referring to the section of the HUD where junk fees tend to show up at closing that are excluded from the initial disclosure.

I am not picking on you. But you represent all of us in the mortgage industry. You talk about GFE's and how loan officer's can basically bait and switch or mislead. I read the link to your blog section. You bash GFE's, but you give no description of what you just mentioned that I copied from you above. You never once talked about fees not being disclosed and the popping up at settlement. And you can't get that from what you wrote and or provided. 

Just as I pointed out, in all honesty, you didn't disclose to anyone in here or the general public, exactly what you were trying to prove. All you did was bash a GFE and gave us no other information about the clients. Nor did you even tell us why you were bringing this or what point you were trying to get across. I guess I get defensive now, because this is very misleading to the public, without all the facts and your thoughts written on paper. 

Again, sorry if this might come across mean, but just as you expect the loan officer in this case to be upfront and be very clear, you need to do the same when ranting on a mortgage issue. Just my opinion and thanks for your time.

Morgan-Granted the GFE was "light".  My GFE's are so full that many get a little scared; I include everything because I do not like surprises at closing. Besides, I like referrals

However, it seems as though you are misinforming customers.  I have read a few of the comments (not all).  Please make sure that you are properly educated on GFE's before you advise customers.

I am not sure if anyone is actually accusing you of intentionally misinforming customers as much as not giving them the full picture with which to understand the point of what you are saying.

By not presenting the full picture and completely explaining a scenario, by definition, you are MIStakenly INFORMING them. Hence, misinforming.

I would venture to go out on a limb and say that most comments that I see here are just asking that you adequately explain what you mean when you address faulty GFE's. If not, all you have served to do is to inflame the customer with only part of the information.

I don't think that was you intention, but, when I first read your post, I was terrified that some unknowing consumer would read this and go ballistic on the next loan officer who posted an appraisal fee POC or had processing fees. I honestly don't think that was what you intended.

In this post-Imus world, we may want to serioulsy think about how we construct what we say. This way your point is clearly represented and leaves less chance for......misinformation.

Whoa!  Morgan's correct!  Look at the date of the GFE (last month) and the note rate (4%).

There is NO WAY in hell this loan could be funded.  I don't care how "platinum" the program is or what "advantage" they give.

There are NO ARMS offering a 4% rate in this environment and there weren't in March.  Don't bring up neg-am because it's not disclosed as one "Program= Platinum Advantage".

Morgan, the accompanying TIL would be more helpful but I believe that your critique of the GFE was accurate 

Brian....yes, there is and was a 4% ARm... FHA... sure, it costs 2 1/2 points. But just the mere fact that it does exist. Forget about the tag line for the type of program mentioned. My whole point on that is that you just can't say that it's not out there, when it was and still is or was as of yesterday. Just because it seems to low, doesn't mean it isn't.

Morgan.... I read your update. That was all that I was looking for.  thanks

Morgan-The majority of loans require an appraisal.  Appraisal are either paid at closing on the HUD, or paid out of pocket.  On your example, your circled the $350 appraisal feed that was clearly checked POC (paid outside of closing) and wrote "No Charge?  Yeah Right!";  How do you figure there is not charge?  The appraisal was paid outside of closing.  So, someone paid for it prior to closing.  When I check that box, it means the customer is responsible for paying for the appraisal directly to the appraiser.  MISINFORMATION

Your terminology for "junk fee" is offensive. I earn every cent I make on a loan.  I work for my customers.  My time, knowledge, and hard work is notjunk.  I know that is the common term, but did we tell an attorney that his retainer fee is junk?  How about your paediatrician?  Better yet, do you work for free?  Is your company a non-profit organization? I am going to go out on a limb here and say no.  

You have a settlement fee of $200 listed and you say "Not!"; I don't quite understand what you are getting at.  Now, keeping in mind that every state is different, I have yet to see a settlement fee for more than $250.00  When it is that much, it because the agent had to travel quite a bit to close the loan, or the settlement is occurring lateat night.  I know for a fact that Berturm Settlement (Rob Robinson is an active member) does not charge more than $150 for a settlement, even if they travel out of state.  (Keep in mind that a sub-contracted closer is another story).

You are correct in saying that the government will get their money.  However, I do have a few lenders that have a "No Closing Cost Option";.  I have seen the HUD's from the settlements so I know that they do exist.  There is no recording fee with this product.  As for title insurance, ifit is required, in PA every loan officer has at least one chart within hand's reach.  I gladly show it to my customers. 

Now let's address your comment on interim interest.  Most lenders require that a due date be the 1st of the month.  This is not to make more money.  This is for collection purposes.  Most grace periods are 15 day.  That leaves, on average, 15 days to get payments in that are due.  If delinquency is up, profit is down.  Share holders have a tendency to frown upon low and negative profits.  How would you feel if you had stock in South Star, MLN, etc.  There is a possibility that the intended lender does not require a 1st due date.  So it is possible that it is not incorrect.

We are not trying to attack you on the subject.  Customer do read our blogs, and they put trust into us.  We need to properly inform them.  Every loan scenario is different.  If someone had a GFE with only $795 is closing costs, it could be correct (depending on the loan and the state). 

Yes, if a customer gets a light GFE, they should question it.  If the GFE is not close to the HUD, WALK AWAY!  There are plenty of LO's out here that do not lie, cheat, etc.  Is that the point of you blog?

Some other words of advice, your wording on the GFE's while you are pointing things out could be more professional.   You should not put a competitor down, just educate your customer while staying positive.

"My education and understanding of compliance issues and Good Faith Estimate disclosures is thorough".  I think we can all say there is always room to learn and improve.

Morgan I agree with you that if I personally received this from a lender I would laugh. At the same time if I was comparing it to my GFE to a consumer I would be very careful to call anything "junk" or unnecessary. As we know fees are different for each of us depending on our companies and line of work, but that does not mean we can label them "junk".

It my experience it is far better for us to show what should be on a good faith and explain it properly rather than rip someone else's good faith. Again just from my years of experience with people comparing.

We all have to be careful that what we put out there could some day end up as an "example" on the internet somewhere (ask any celebrity).  I don't get too involved in ARM products, as the fixed rate mortgages were very competitive.

That being said, the interim interest could have actually been listed as a CREDIT to the closing costs, not a charge if they were to settle the loan within the first few days of a month.  Also, the fees charged are not that out of line with what I have seen some other lenders charge in my area.

Many lenders (brokers, especially) tell the homeowner that when the appraiser shows up, they are to give them a check at that time.  This would then be listed as a POC on the GFE.  There are many ways to get the costs down on an estimate, but unfortunately too many of them focus on the word "Estimate".  At settlement some other fees have a way of showing up.

Just my two cents worth...

Unfortunately or fortunately, most of my clients go down GFEs line by line and want to have an undestanding of what the fees are. This forces me and those who work for me to make sure our fees are not only justified, but, fully explained to the consumer.

When it comes to the question of credibility, the only thing the consumer has to judge us on is what we put on paper versus what we have said. Its been a rare thing that I submit a GFE to a client and they have NO question. As was said before, if you have too many fees you are going to be scrutinized, but, if you don't have enough, they will ask, "Is this it??" And if ANYTHING pops up away from what you estimated, you are on the hot seat. It won't matter that they waited around too long to close and now you are in a new month and there are more prepaid interest charges or anything else. All they will say is I don't understand this and this isn't what you said.

I wouldn't bet that much on the naiivity of our clients. If they are that naiive, how will they be able to understand when you are explaining what a good or bad GFE is?

I am afraid that alot of us are perceiving this as an alarmist type of advertising. And as I commented before, if that is not your intention, then you may want to qualify your statements and thoughts.

Morgan,

Please show more of these ridiculous GFE's.  It is apparent that this is quite an educational tool about secondary market pricing to us.