The new good faith estimate is getting plenty of protest from mortgage originators across the country…my biggest issue is that I cannot effectively use it as a tool to help people who are interested in buying a home or refinancing effectively see what the proposed mortgage scenario may look like.
I received this email from a client I've been working with this morning:
"[We] are back on the search for a new home and we have found a couple that we would like to run past you. When you have a moment, could you crunch the numbers for us and provide a good faith estimate on these two properties. We would like to see one with the variable that the seller covers the closing costs and one with us covering the closing costs. That will give us a good idea of what the middle looks like once we start negotiating."
The new good faith estimate from HUD does not show consumers:
- seller contributions towards allowable closing costs
- total funds due at closing
- total monthly mortgage payment (PITI aka principal, interest, taxes and insurance)
For what my clients are interested in seeing, HUD's good faith estimate isn't very useful or meaningful.
I do like that the new GFE is a uniform document required to be used by all mortgage originators however it is not effective for consumers who actually want to compare potential scenarios.
I find the new good faith estimate conflicted since it has a heavy emphasis on shopping rates (page 3 of the document includes a shopping chart), yet mortgage originators are (and will be) discouraged from using it for "rate shoppers" since the document is binding for a minimum of 10 business days even though the consumer does not have to sign it or commit. It's one thing to be bound by our lender fees I quote (I've done that for years without this new document), however to be stuck with third party fees that I have no control over for 10 business days is something I'm not too happy about.
Many mortgage companies, banks and loan operating systems are in the process of creating forms that can be used for the purpose of rate quotes and/or illustrating what the new good faith estimate has missing. This recreates the very same scenario which I thought HUD was trying to correct: consumers will have to sift through various documents which will not be uniform from lender to lender. It's very puzzling to me and I'm sure it will be to the consumer as well.