The new GFE 2010 was created to enable a buyer/borrower to shop for a loan rate and costs. It even provides a space for the competitors' figures to be shown side-by-side. While the intent is commendable, the reality is ineffective. There are 3 big flaws in the form. Nowhere on the 3 pages does the borrower see what their payment is proposed to be, nowhere are they shown their total cash amount needed (no downpayment spot), and once the GFE has been presented, no changes can be made to costs without a legitimate Change of Circumstance. For instance, if an undewriter feels the need for a desk review or field review of the appraisal, that is not something that can be charged to the buyer/borrower since it was not disclosed initially and is not considered a Change of Circumstance. Or if an investor withdraws a loan program that was disclosed in the GFE, the broker must honor the lock and rate even though the investor is gone. And the new GFE should not be given to a client until a property is identified, usually thru the contracting process. Well at that point, time is critical, the client is stressed with inspection, title commitment review, packing, lining up a moving truck, etc. and now they are supposed to 'shop' for a loan. The whole idea in years past was to have clients do their due diligence BEFORE writing a contract to find the loan officer/lender they wished to work with and obtain product/rate/cost information ahead of time so it was one less thing to worry about during the contract process. The new GFE effectively puts the burden on the client to do their shopping for loans during this time constraint; one more point of stress. I think that time will prove that this new form is not in the consumer's best interest and will be withdrawn.
Geez........Why does the government continue to make the homebuying process tougher in an economy that needs regain itself? This is absurd and a bit scary for the future......I have a feeling that it just means less closings.
I agree. A lender representing my client took forever to get them the GFE, because he did not want to make any mistakes. The new GFE is slowing down the process and is making every lender paranoid. It really should be call the Good Faith Exact Amount. There is no estimate allowed with the new law. They have to be exact.
Wendy - I no longer give out GFE's with my pre-approvals but rather "initial fees worksheets" (IFW), which covers all the things that the new GFE doesn't. Some people (mostly Realtors and people who don't work in the lending industry) complain that the IFW are an excuse for LO's not to guarantee their fees.
I don't know what it's like in other markets, but here in Los Angeles & Ventura counties, the time from pre-approval to opening escrow can be several months. There isn't anyway any experienced LO that can guarantee lender fees or loan products and guidelines for that kind of timeframe. So I couldn't care less about the morons people who think I'm trying to cheat people because I won't give a GFE with my pre-approvals when my client hasn't looked at a single property yet.
Once my client gets into escrow they will get their GFE and I will adhere to the rules and regulations of that GFE.
Wendy, here is hoping your are correct on the form being withdrawn. I always strived to be as accurate as possible before the change although we all know there are people out there who do not. It is unfortunate that we are suffering the pain that others have caused.
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