New 2015 Good Faith Estimate (GFE)

Back on February of this year I wrote a blog on the New Good Faith Estimate (GFE) which the The Consumer Finance Protection Bureau (CFPB) will be implementing on August 15, 2015.  As I stated in my previous blog, I have never liked the present GFE, it is three page long, but is less transparent than the previous GFE which was only one page long.  So I am anxiously awaiting the implementation of the New 2015 Good Faith Estimate (GFE).  A full view of the new GFE is available at this LINK.

This past Wednesday I attended a webinar on the new GFE.  The webinar covered some new terms, but more importantly it concentrated the time periods associated with disclosure dates for the new GFE.  For the most part the present disclosure periods will remain pretty much the same for the new GFE.  Presently the main time period Lenders have to be very sensitive of is the 3 day disclosure requirement from the time a Lender/Loan Originator/Broker has the 6 pieces of information which constitutes an application.

• Borrower(s) Name
• Borrower(s) Income
  
• Borrower(s) Social Security Number
  
• Property Address
• Estimated value of the property being purchase or refinanced
• Mortgage Loan Amount.

Once these 6 pieces of information are known the Lender/Loan Originator/Broker needs to provide the Borrower(s) with a GFE within 3 business days.  There are also time periods for re-disclosure if the APR goes up or down by 1/8 of a percent or more which Lenders/Loan Originators/Brokers need to be concerned with.   But the 3 days after the 6 pieces of information are known have been the one of most concern.

However, with the new GFE a new disclosure date is going to have a MAJOR impact on Closings.  Once the new GFE is implemented, Lenders will need to provide Borrower(s) with a final HUD-1 (being renamed "Closing Disclosure") WITHIN 3 BUSINESS DAYS.  This new disclosure requirement is going to have a HUGE impact on how Closings are presently done.  NO LONGER will there be last minute Closings, and if something changes which causes the APR to go up or down by 1/8 of a percent or more in those last 3 days, a new 3 day time period will begin.

With this new 3 day requirement, Closing Attorneys and Closing Agents will not be able to wait until the day before the Closing for meter readings, or any other adjust which needs to be included in the Closing Disclosure (HUD-1).  This means Lenders, Loan Originators, Brokers, Realtors, Attorneys, and Closing Agents need to all be very conscious of the new 3 day requirement, and have everything ready 3 days before the Closing, or there will not be a Closing.

It may seem like August 15, 2015 is a long way away, but it will be here before we know it.  This means every one needs to start adapting to this new 3 day closing requirement before it becomes mandatory.  Waiting for the new GFE and Closing Disclosure to go into effect to implement the new 3 business day disclosure requirement would be a major mistake. Waiting until the last minute is a receipt for very angry Borrowers and Sellers, as well as the Realtors/Agents who represent them when the Closing does not happen as scheduled.

I am a fan of the New 2015 New Good Faith Estimate (GFE), but the new 3 day Closing Disclosure requirement needs to be planned for well ahead of the new GFE going into effect.  Everyone needs to understand the implications if the Borrower does not receive the new Closing Disclosure within the required 3 days before the Closing.  This will be an even greater concern for a Seller who need to coordinate the selling and purchasing of a home on the same day.

As we get closer to the implementation of the New 2015 New Good Faith Estimate (GFE) I will write a few more blogs explaining the differences between the present GFE and the New 2015 New Good Faith Estimate (GFE).  But I wanted to start with this new 3 business day requirement because it is the most important change in my opinion.