The New Mortgage Good Faith Estimate Form

Who's Form Is It?
by Bill Borden

Happy New Year, everyone!

As usual, we’re ringing in the New Year with a lot of resolutions, new expectations and new goals. While we ponder what the government is going to do to “fix” health care and stabilize our economy, we can look at on change that DID happen and is now in effect: a new Good Faith Estimate form and a new HUD-1 Settlement Statement.
While change may be good, it is hard to find people in the real estate or mortgage business who are happy with the changes. This is a response to an article in REALTOR® Magazine that I found online:

“Unfortunately, the new GFE does not address two points of major importance: 1) How much to close and 2) How much is the monthly payment? In fact, the new GFE addresses closing costs in such a way as to confuse the borrower immensely, because it addresses the costs as ‘Total Settlement Charges” and does not include some important offsets, yet makes us include items that are historically paid by the seller. On page 1, it addresses the monthly payment in two sections–one concerning only principle, interest, and mortgage insurance and the other addressing only payment of escrows for taxes and property insurance. This is more confusing to the consumer! Everyone in this business understands that taxes, insurance, and HOA fees can add hundreds to the monthly payment, yet they’re not addressed clearly in the GFE. The fact that a three-page document has 42 pages of explanatory handouts and 51 pages of FAQs (four per page) tells me that this is the most ill-designed form I have ever seen!”

It seems that the new and improved forms raise as many questions as answers. Yes, the language is basically more clear, but it seems like HUD would’ve gotten some more input from focus groups made up of “average” consumers and from real estate practitioners (agents, brokers, closing attorneys, etc.) before they gave the forms the thumbs up and introduced them into use.

After sitting through several webinars, reading numerous “explanations” and such, I am still confused as to how this might be more helpful to you, the consumer. If you have questions, give Checkpoint Mortgage a call and bring in your GFE’s and we will work through it together.