Will the new good faith estimate help or confuse the client?

Roger, any time the government "simplifies" things by turning a 1 page document into 3 you should worry!  Time will tell.

I've attended a few of these classes recently on the new disclosures and forms.  I think it lead to more fraud.  Expenses are lumped together and after the sweeping changes, they do not have what your total monthly payment will be!  PITI!  Pretty pathetic if you ask me!

Roger -

I agree.  It will take a well informed mortgage broker to help buyers make the transition to this "simpler" GFE.

Personally, my short answer is No. It shouldnt confuse the borrowers.

Here's how I think the "best" will rise up to the occasion. More client communication to make them understand it.

I'll be watching responses from this post.

I took a class on this from the head of HUD in Denver. The room was packed mostly with agents, but also lenders and a couple of title people. All the agents liked it, the lenders and title people just looked nervous. We were told it was written at a 7th grade level, and it did seem simple to me. The GFE is about settlement charges, I suppose that's why the monthly payment isn't on it? Maybe whether or not people like it will be determined by whether or not the person teaching their class likes it?

One thing I really like, is lenders can't charge a fee to prospective borrowers until they've received all this information and had a chance to digest it. I'm constantly warning people not to give hundreds of dollars to a lender up front, because then if they receive bad service they're locked in. Once this goes into effect, that practice should stop.

The big problem is resisting change, even when it is beneficial.  I am a proponent of small unintrusive government, but sometimes the government actually does some good and this is one of those rare times.

As I commented yesterday in a different post, I think this new Good Faith Estimate and new HUD-1 will actually help buyer-borrowers.  It will be easier to compare different loans from the same and different lenders.  I have always helped my clients with this type of information arrangement when they couldn't make sense of the existing GFE or HUD-1.

Also this system will reduce the "surprises" that appear just before or at closings.  Almost all payment and fee discrepancies will have to be dealt with well before the closing.

It is a matter of education for lenders, closing agents, realtors, and borrowers.

Mark Cohen, Broker, Eyemark Realty, Gainesville, Florida USA

Remember, most buyers aren't going to see it a new GFE, unless they have purchased something else very recently. They're just going to see the GFE - unless someone tells them it's new and different and more confusing.  

Well - here's this new GFE. It used be different but now it's this way. If you bought last year, this would have been one page and had certain info on it but now they have this new one which is longer. Here's some of things they've changed. We just got this new stuff and some people think it's better than the old one but some think it's more confusing"

It is, in my opinion, up to the loan officer to learn the ins and outs of this so well that they can answer any questions. If their industry professional acts confused and doesn't put forth an air of understanding and confidence, then the client will undoubtedly be confused.

I think it's clear as mud.

I swear, all of these changes that are supposed to be helping the Buyer (HVCC, etc.) are really adding to the stress and confusion of a normal transaction. I do think that page 3 is nice, and it's important for the Buyer to know what it is they are legally agreeing to--versus, just sign here and pray--but they way they've lumped and changed other figures is really going to lead to more confusion.

Our office has requested another class to go over those lumped figures.

Good luck to us all!

Roger,

I agree there is a substantial amount of information not included on the new GFE that is valuable. I intend to present the GFE in conjunction with the application to fill in some of those holes.

Dan

Nothing like government to make your job more important.  Can you prepare a separate disclosure (form) showing the things they leave off; or would that violate some rule?

If it's government mandated it will be screwed up.  So much for making it easier for buyers or sellers to understand their closing costs.  Makes you want to just give up.

Unfortunately a loan officer can load all the fees into one number and the buyer still is blind as to the costs breakdown of the loan.

     It seems that everyone just assumes that it's the governments job to make sure the consumer is aware of what sort of business transaction they are getting themselves into when it comes to home refinance or home purchasing.   When did that become an assumption that we are all willing to make, and then base our comments around that assumption?   I don't want the government telling me whether or not I'm making a good or bad deal on a home, television, car, or blender.   I can find out for myself, or do some research, or something else where I can get trustworthy information.   Just because the government puts out a statement that the new GFE will simplify lending transactions for the borrower or protect the borrower from unsavory lending characters doesn't make it true.   How many things has the government told us that were nothing close to what they intended for us to believe.   Borrowers should take more personal responsibility for the commitments they make and the paperwork to which they commit their signature.   If it's so important that a borrower understand what they are being charged on a loan transaction, seems like the borrower should make the effort to find out.   If they don't wish to make the effort, or care about what the numbers mean, why is it automatically the governments job to step in and "help" out?   If Charly Rangel and Tim Gietner are authorized by the government to rewrite the tax code (they are both tax cheats in case you didn't know), who knows what intentions are brewing with those in government who have oversight of the mortgage sector?   I will wager that the private sector, fueled by capitalism and the profit and loss motive, will always create the best ways to deal with issues of major public concern.   Somehow, somwhere, the government got the idea that they must prevent even one person from getting a loan they don't understand.   What kind of logic is that?   Some people will get taken, but that's no reason to pass a law or create a position intended just to protect that one person or single situation.  But, you say, it wasn't just one person that got hurt by these confusing GFE's or exotic loans, and you're right.   It still doesn't justify the automatic assumption that the government, by default, is responsible for the solution.   After all, wasn't it the government that forced lenders to make low to moderate income loans to people who we all knew couldn't pay them back?

the buyer can't read the GFE we use now...and neither can most agents( but the sure can find the line with their commission on it) and loan officers...courpt loan officers will lie to the buyer even with the new GFE...the new rules hurt the good and honest people beacuse the bad agent and loan officers still keep ripping off the consumer

Most buyer are confused by the current GFE.  

I agree with more transparency but if the borrower doesn't do their own due diligence and blindly believes what they are told and many do.  There is no way to 100% guarantee they won't be riped off.

I believe the new licensing requirements will do more to help protect consumers.  However, they still need to question things that don't make sense.  Never hurts to get a second option.

Many lenders I have spoken to are not excited about the HUD changes.  It will be interesting to see how the changes impact everyone.

It's probably going to be a positive change for the better after everyone gets more comfortable. It should only help the good mortgage people by cutting down on "bait and switch" tactics.

I agree with comment #23. I don't even have a problem with the fact that it doesn't show property taxes and insurance costs. These are variables that have the ability to fact the overall monthly payment on a varying basis. IMHO, the fact that the monthly payment could vary based upon insurance and property taxes SHOULD be explained to the buyer by the lender and reiterated by the Realtor. This document prevents slimy low ballers from underestimating charges and costs in order to secure business. I like it and akin it to Agency disclosures that Realtors make. It helps to make a better informed consumer.