The Good Faith Estimate will retire today

hud_GFE_TOMBSTONE It is hard to believe that it was just five years ago when HUD created and required the use of their uniform Good Faith Estimate, often referred to as the 2010 GFE. HUD was very proud of this achievement despite obvious flaws with the document, including (and not limited to) no total monthly mortgage payment (PITI), no total funds due for closing and lenders having to disclose costs that the borrower did not have to pay (such as the owners title policy). The 2010 GFE, which was created to help borrowers shop lenders, was also severely flawed because a lender could not issue the GFE with having a “TBD” address for home shoppers. There was no wiggle room for lenders to re-issue the GFE to add an address.

Even though we have had five years to deal with this document and all of it’s regulations, it still creates issues with transactions to this day and, in my opinion, it has not provided any clarity to consumers who are in the mortgage process.

Today, October 2, 2015, is the last day a new loan application can issue a 2010 GFE. The 2010 GFE will be used on transactions with application dates of October 2, 2015 and earlier until those transactions close or applications are cancelled. Effective tomorrow, October 3, 2015, we lenders are required to use CFPB’s creation: the Loan Estimate (aka LE). Lenders who are not ready to issue the LE will not be able to originate mortgages as those loans will be unsaleable.

I would  like to tell you that CFPB’s Loan Estimate is dramatically improved and will make bring a sigh of relief to consumers and lenders across the country…that remains to be seen. I already see troubling similarities between the Loan Estimate and the retired 2010 GFE, including not being able to truly disclose accurate title fees to the borrower and not being able to re-issue a Loan Estimate if you disclosed with a TBD address.

Anyhow, I just wanted to take a very brief moment to pay respect to the 2010 GFE. I wrote several articles about it during the’s past five years at The Mortgage Porter. I really appreciated HUD’s FAQs that were issued following the release of the 2010 GFE. The 2010 GFE brought us new terms, such as PIMI (principal, interest and mortgage insurance) since it did not disclose property taxes and home owners insurance in the payment, and “changed circumstance” for when a GFE could be re-issued.

Good by and RIP, HUD 2010 GFE… I’d like to say you’ll be missed but I’m hoping that CFPB’s Loan Estimate will be an improvement. Time will tell.

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