Of all the changes that have found their way to the new GFE HUD the single most important is to take the word “estimate” off the table as a shield for a systemic “bait & switch.” The old way of cajoling the buyer to agree to move forward because of a low ball “estimate” are over. And it was “cajoling” and that is being nice about it. There have been seemingly countless incidents of calling the LO as we are at or about to be at closing to get clarification about what a fee is and why it wasn’t on the GFE only to have him say “that’s why they call it an “estimate.” That game is over. The GFE needs to match the HUD or the LO has to eat the difference.
Think of it this way: the LO needs to do what they say they are going to do, when they say they are going to do it. Wait! That’s the definition of “integrity.”
OH NO! NOT THAT!
This is gonna hurt, folks. And, guess what? Round 1 has been a nightmare for a lot of deals that are being orchestrated by LO’s and their bosses that are used to a free hand at hiding behind the “estimate” as an integral part of the “bait” they were able to eventually “switch.”
Its not like the powers to be got it right on the first round – they are a good distance from getting it right (in my humble view) but this is a big leap forward. There are still way too many “fine print” details that are not easily understood and way outside the normal consumer’s daily experience. The buyer is trying to do a deal – he cares about those details, no question but he wants to know what it is going to cost him to move in and what its going to cost him to live there. The bottom line is still buried in a disclosure process that starts from a global view and touches on the outreaches of ‘mortgage/HUD-1 theory’ before it gets real and comes home to the trenches where our consumers lives.
Regardless it is a hell of a start.
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