There is much complaining about the new RESPA Reform, but, it is a needed response to try and curb the many abuses by sub-prime lenders and others who sold loans that were not in the best interest of the buyer.
The reasons given on "why the changes" are numerous. However ones that appear to be justified by most are:
- To educate the buyers
- To encourage shopping of loans
- To increase competition, thereby reducing costs for the buyer
There were no differntiations between the buyer, lender or seller fees and this was confusing to buyers trying to figure out who was offering the best deal.
Some of the most recognizable changes to be aware of are the following:
- The Good Faith Estimate is not a statement of how much to bring to closing
- The "Estimate of closing costs" will show how much to bring to closing
- Down-payment will not show on GFE, nor will seller-paid closing costs
- Once the loan is registered and the rate locked, the GFE is a binding document
- Standard forms will be used by all lenders therefore the hope is no more "hidden fees" because all the names of the fees will be the same
- Any changes to sales price seller contributions, etc. that may be negotiated will require the GFE to be recalculated and resent to the buyer. This must be finalized three days prioer to closing to avoid delays. If not and there are changes "don't look for closing on the date of the contract!"
Dates are going to be very important to follow if you expect closings to run smoothly on the agreed date in the contract. It is crucial that all parties work together as we muddle through the first quarter closings in 2010! Whether we like it or agree with it is not the question right now. As professionals we need to keep the wheels turning and work in concert to make transaction close so our clients can be on their way!