Is Foreclosure No Longer a Social Disease?

A Lender’s Thoughts on the New Good Faith Estimate

February 1, 2010 | By Kelley Koehler | Filed Under Loans and Financing

Now that we spent a week on the changes, I thought we should look at the RESPA reform from some other sides. These changes impact not only a home buyer, but also the lender and the escrow officer. So let’s see what they have to say.

I asked Phaedra Wilson of Sunstreet Mortgage to comment with her thoughts on the new Good Faith Estimate. Here’s her response:

“My two biggest issues with the new GFE is that 1, We MUST disclose the owners policy, an expensive fee not typically paid by the buyer in Arizona. 2, We are at the mercy of title companies to supply us all the buyers relevant title fees. In cases where the seller is not a bank, this is not such a challenging task. But, since many transactions are now bank owned properties, it is typically impossible to issue a GFE in the required 3 days timeframe with accurate title fees. Since we are not “directing the title business” in a purchase transaction, we are told we are not responsible for the variances in those fees. BUT, since we are otherwise held accountable, the typical loan officer is going to adhere to the standard requirements and issue a GFE with accurate title fees.

The media is painting the loan officer to be an deceptive party trying to “disguise” borrowers fees with an alternative form to the GFE. This form, in most cases, is NOT to REPLACE the GFE but merely to accompany it since the NEW GFE lacks disclosure of the actual funds required to close and the PITI payment. Consumers seem quite interested in these two items.
Investors for the most part, seem to have granted some leniency with regards to the rules of disclosure on this new form for the next couple of months. We jokingly speculate once we “get the hang of it” they’ll change it again. If they do, including the payment and cash to close number will dramatically improve this disclosure. I otherwise think it has some beneficial information the consumer needs when contemplating their options.”

Comments

2 Responses to “A Lender’s Thoughts on the New Good Faith Estimate”

Shane Hollenback on February 1st, 2010 12:56 pm

Kelley, I think Phaedra hit her assessment out of the park. Given a 3 day window to disclose a GFE, and being liable for a 3rd party’s fees, it’s going to be a fun and interesting next few months to work out the kinks. And yes, I’m with Phaedra, just as we get used to it, it will likely change.
daltonsbriefs on February 1st, 2010 1:27 pm

Your lender is exactly right, this does not help the consumer, as a matter of fact it makes things more confusing for the consumer. This entire RESPA change is a monumental FAIL by HUD.

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