And that is how the current version of the Good Faith Estimate (GFE) was born.
Now, a consumer does not have to look at 5 different GFEs trying to match up fees and costs and information. You know what else the consumer doesn’t have to look for?
- The total estimated mortgage payment. That is right! The form shows the estimated principal and interest and mortgage insurance on the loan but it does not give you an estimate of taxes and insurance. Apparently the powers that be were not aware that FHA, VA and USDA loans (which make up over 50% of the market share) all require that taxes and insurance be included in the mortgage payment. And how about the large percentage of people who are not required to impound their taxes and insurance but choose to?
- Total of estimated cash needed at closing. Who wants that? Right? The current version of the GFE shows subtotals of all costs and fees, but an estimated of funds needed at closing. Who in Capital Hill decided that was not important?
- Breakdown of lender fees. Under the current version of the Good Faith Estimate, all lender fees are lumped together under “Origination” charge. A consumer is able to compare the totals between two lenders, but wouldn’t you want to know what you are being charged for?
- Breakdown of escrow and title fees. Under the current RESPA laws, a lender is required to disclose escrow and title fees and would be responsible for any under disclosure of the fees. REALLY? They are third party fees but I’m responsible for the amount? So one of two things happen (1) The lender has to wait for the escrow/title company to disclose the fees to the lender or (2) the fees are over estimated to protect the lender from having to cover a portion of the cost. So much for accurate figures
- Breakdown of your tax and insurance escrow account. Perhaps that goes back to #1 above. There is a spot to show the total, but I guess it’s up to the consumer to do the math. First, of course, they need to figure out what amounts the lender used to prepare the estimate… hmmm wonder how many forms they will have to go through to find that information?
But don’t despair, following a long set tradition of killing as many trees as possible, the GFE does come with a 3rd page which the consumer can fill out while comparing loans. Perhaps adding an area for the client to write down actual relevant information about what was omitted from the form would be a good idea.