Did you know that the Good Faith Estimate (GFE) is changing?
Why is the good faith changing? RESPA (Real Estate Settlement Procedures Act) is an industry wide initiative required by U.S. Dept of Housing and Urban Development (HUD) in which all lenders and mortgage brokers will need to comply with no later than January 1, 2010.
Here are some key changes:
- The GFE (Good Faith Estimate) format will now be standardized across the industry. The GFE can no longer be customized to meet a lender/program/product-specific need, which will ultimately lead to less confusion for borrowers.
- Charges disclosed are transactional (regardless of who is paying - the total cost is disclosed) and not specific to charges being paid by the borrower.
- The GFE will no longer calculate the cash to close, down payments, or POC (Paid Outside of Closing) charges.
- The origination charge will represent ALL lender charges as one lump sum.
The new three-page GFE will consist of the following:
- Page one summarizes key loan terms, breaks down escrow information and displays total estimated settlement charges for the loan transaction so the consumer can easily compare loan terms between lenders when shopping for rates.
- Page two estimates total settlement charges.
- Page three is an instructional page designed for borrowers to use as a shopping guide to compare GFE's from other lenders.
GFE Supplement:
A fourth page may be added to your good faith estimate, if there are additional services or costs that will not fit on page two of your good faith estimate.
What is the importance of these changes?
This will provide further protection to the consumer from undisclosed charges and fee increases in settlement charges. It is also intended to help consumer's comparison shop among the different loan originators/lenders.
Heather Burns
Home Mortgage Consultant
Wells Fargo Home Mortgage
10900 NE 8th St Suite 1430
Bellevue, WA 98004
(425) 468-8645 Tel
(206) 714-3522 Cell
(866) 496-5671 Fax
Heather.S.Burns@wellsfargo.com
Website: www.wfhm.com/heather-burns2
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