Changed Circumstance: When a Good Faith Estimate CAN be Re-Issued

EDITORS NOTE: Effective on loan applications dated October 3, 2015 and later, the Good Faith Estimate has been replaced by the “Loan Estimate” which has some similarities to the retired Good Faith Estimate, including requiring a “changed circumstance” for it to be re-issued. 

Most Mortgage Originators have a distaste for Good Faith Estimate now required to be used by HUD due to a term called “changed circumstance”.  A changed circumstance is the only time that a mortgage originator can re-issue a good faith estimate (unless the estimate has expired) and the only items that can be modified are those impacted by the circumstance that changed.

According to the RESPA changed circumstances is defined as:

(1)(i) Acts of God, war, disaster, or other emergency;

(ii)  Information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided. This may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE;

(iii)  New information particular to the borrower or transaction that was not relied on in providing the GFE; or

(iv)  Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.

(2)  Changed circumstances do not include:

(i)  The borrower’s name, the borrower’s monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator prior to providing the GFE, unless the information changes or is found to be inaccurate after the GFE has been provided; or

(ii)  Market price fluctuations by themselves

HUD adds in their RESPA FAQs (as of December 30, 2009):

None of the information collected by the loan originator prior to issue the GFE may later become basis for a “changed circumstance” upon which a loan originator may offer a revised GFE, unless the loan originator can demonstrate that there was a change in the particular information or that it was inaccurate, or that the loan originator did not rely on that particular information in issuing the GFE….

According to HUD’s RESPA FAQ 8ii, simply issuing a good faith estimate with a TBD address (or no address) is not cause for a “changed circumstance” and if a mortgage originator does issue a GFE, remember, we are presumed to have all the information necessary to create a loan application per HUD.

If a mortgage broker issues a GFE based on one lenders products and origination fees, but places the loan with another lender–the mortgage broker may wind up having to eat the difference in fees if they are higher.

Examples of things that *could* be considered a changed circumstance (after a good faith estimate is issued)  according to HUDs FAQs:

  • GSE (Fannie/Freddie), FHA or mortgage insurance program changes prior to the GFE being issued IF the mortgage originator did not have notice of those changes (good luck proving that).
  • The property address provided by the borrower is not correct.
  • Parties are added or removed from title.
  • the loan does not close by the closing date in the original purchase and sales agreement provided to the lender.
  • Additional appraisal, pest or other inspections requried.

The fees in Block 1 of the Good Faith Estimate cannot change with a changed circumstance unless it is the loan amount that changed and a portion of the “origination charge” is a percentage of the loan amount.  If after a GFE is issued and a changed circumstance, or borrower requested change happens, which impacts pricing (for example, a low appraisal), the change must be reflected in Box 2 of the Good Faith Estimate, which will then reflect the “adjusted origination charges”.

Changed circumstances is another great example of the best of intentions with potentially terrible outcomes for borrowers.  Many mortgage originators will be weary to issue the new good faith estimate because of all the RESPA regulations it carries.  In addition, banks and wholesale lenders are making their own layer of guidelines on top of the “what could trigger a changed circumstance”.   Originators run the risk when issuing a revised GFE of the bank/lender balking at it down the road–especially if the borrower winds up going into default.  This is just another opportunity for banks/lenders to find cause for a “buy back”.

I’m hoping by reading my articles about the new GFE, you can see why some lenders are a little leary to issue them as freely as we did pre-2010.

An important reminder that this, as well as all of my posts are my opinion only and are not intended as legal advice nor do they replace your mortgage compliance department.



  1. When we originally disclose the GFE showing the loan is escrowed, then the customer decides they do not want to escrow RE taxes and insurance, is it a must to redisclose taking the escrow portion out of the GFE?

    • Hi Pamela,
      check with the compliance officer at your bank.

      IMO this is a changed circumstance because the borrower is changing the terms by paying taxes and insurance separately. This may impact pricing (most lenders charge 0.25% in fee when borrowers pay reserves separately) and it could impact your loan amount.

      If it does impact pricing, and you do not redisclose within the allotted time period, you may not be able to charge the 0.25% in fee.

      Again – check with your management.

    • Good day,

      My fiancé and I were issued a GFE with a locked in interest rate at 3.875% which was supposedly good for 100 days.. This was in Oct 2015. It is now late May(crazy I know). We recently received another GFE with a new interest rate at 4.125% and inflated charges everywhere. We both have attempted to keep in constant contact with our processor and not once has she mentioned any of this to us. There was no phone call, email, or package sent by mail. Also to add insult to injury I believe our paperwork has been mishandled several times which is why no one has answers to our questions. The original processor is no longer working on our file, but the new one is no better. The lack of communication and the inability to get us to closing is making me reconsider working with this bank. My question is, can we face legal action if we decide not to follow through with the purchase of the home? Thank you

      • Harley, I would discuss this with the Loan Officer’s manager, your Real Estate Agent and possibly an attorney, depending on how much earnest money you have at risk.

  2. Act of God.

    Who’s God? That could be interpreted a million ways these days.

  3. Can a decrease in loan amount trigger an increase in government recording charges?

  4. if you mailed a GFE and later notice you you fail to disclose a title service fee, Can I redisclose to include the fee?

    • I don’t believe so, Thelma. HUD’s 2010 GFE does not allow a LO much “oops” wiggle room. The most costly mistake is missing the owners title policy, even though the buyer doesn’t pay for it and it’s not a lender cost.

  5. In my original GFE my lender assumed transfer taxes would be split between buyer and seller. This is a HUD foreclosure. Now, 3 days before closing, he tells me the sellers aren’t paying any transfer taxes, so its all on me. He wants me to sign a changed circumstance form for this. Is this correct or does the lender have to cover the difference. The GFE says transfer taxes cannot increase at settlement.

  6. I had picked a local bank for a home mortgage because they offered an origination fee credit of $789.41. On the day of signing, I was informed by my agent that I was not eligible for the credit because the banks internet was down on the day I signed and she was not able to lock the rate until the next day. Note, 3 weeks had passed where I could have been told this information. Anyway, at this point, I was stuck and had to move on with the mortgage because my current residence had sold and didn’t have time to fight at the time. My agent promised me she would work it out. After 2 weeks of hearing nothing, I called and left a voicemail….no response. I emailed asking how the $789.41 credit was coming along. My response was that she had done everything possible and could not recover the credit. I contacted her boss, manager, and vice president to no avail. I couldn’t understand how this many people were ignoring my complaint. After several calls and emails to people that didn’t care, I was able to contact a person from the investigations department. She asked me why I thought I deserved an origination fee credit. I asked her if she has seen the GFE, and she said that she had it right in front of her. I faxed my copy of the GFE to her. I received a check for the full amount 2 weeks later. What’s disturbing to me is, she had a different copy than the one I had signed. Do I have any recourse to see the company is fined and I receive compensation for the 2 months of wasted time?

    • That IS very disturbing. If you had selected a non-depository (non-bank/non-credit union) mortgage company, they would be state regulated by the Department of Financial Institutions. You should check to see who the regulator(s) are for the bank you had this issue with. I’m glad they refunded your money and you stuck to your guns!

  7. If a GFE was issued along the TIL (same date) and later the APR on the TIL changed from 5.364% to 5.802%. The interest rate has not changed. Apparently, fees itemized as Prepaid Finance Charges went actually down from $1,267.00 to $1,062.50. Should I have received a new GFE disclosure?

    • I would ask your mortgage professional exactly what changed with the closing cost. It seems like a new GFE probably should have been issued – but it’s really hard for me to comment without being the lender for that loan and knowing the circumstances that would have caused those changes.

  8. Dan Pflueger says

    Origionally we issued a GFE with 3 points on it, it was noticed that the points should have been 2 points(cuastomers favor). We did issue a change of circumstance to disclose the proper points. This loan went through internal compliance and it is being discussed that a change should not heve been issued and just shown the change on page 3 of the HUD in the comparisons. Doing it that way the borrower would not have had the correct points, apr or payment. Which way is correct ?

    • Dan, I’m looking forward to the 2010 GFE retiring in 2015… although I must admit, I have not had a chance to read through the pages and pages of guidelines that accompany the new document. I believe that changes to Box 1 cannot be made… and I am no one to provide legal advice or over-ride your (or my) compliance department. Who issued it wrong?

      At our company, the compliance department issues and re-issues, when required, all of our Good Faith Estimates, which really helps to reduce errors.

  9. Rhonda,
    I was issued a good faith est with my MIP at 117.00/mnth back in November. This was also listed in all my disclosure and application documents. A few weeks prior to closing i received a lock in agreement (same interest rate) and a new good faith. I did not go over all the numbers in the good faith (bad of me) but the reason listed for issuing it were that 1. Flood insurance was added, 2 my loan amt went up (actually it went down a few hundred dollars) 3 Interim Interest went down a few dollars and 4 the MIP funding fee went down about 100.00. What i did not notice until closing was that my MIP went up to 288.00 per month and I have refused to close. The lender says the increase was because he used an old case number from April initially for my loan w/ FHA (it was from an old application with him) and when he started a new case # the MIP% increased and he sent a new GFEst (with out telling me and no new TILA). Can he increase the MIP like that after it was initially disclosed?
    I want to close but at the monthly payments in the TILA. Sellers are suing me so I need to figure out what to do quickly. Thank You

    • Robert,
      I don’t recall their being a change in the annual FHA premiums. The annual FHA premium is 1.35% with 3% down payment and 1.30% if you have 5% or more down payment with an FHA loan. Take your base loan amount (before the upfront mortgage insurance premium is added, if financed) x 1.35 or 1.30% and divide this by 12. This should provide you with what your monthly FHA mortgage insurance should be.

      For your FHA mortgage insurance premium to go from $117 to $288 without your loan amount dramatically increasing, does not pencil out. Is it possible that the first good faith was based on conventional or some other non-FHA financing?

      If you do not receive what you feel are straight answers from the loan originator, you can try reaching out to their management.

      Just out of curiosity, what type of lender are you working with?

      • This has always been a FHA loan. The broker has now admitted that in November he used an old file and case # from a previous house I was looking at in April. In July the FHA insurance premium went up substantially(according to my broker). The first good faith and all my disclosures were based on this incorrect information due to him using an incorrect case number. In December he applied for a new case number on this house and that’s when the premium went up. He never explained this to me until closing day a few weeks later. The GFE he had me resign did not mention in the changed circumstances that this premium had gone up or that he had made this mistake. I am getting mixed information from everyone as to whether or not this premium can be increased by this much or by only 10 percent. I cant find anything that tells me whether or not the Monhtly Mortgage Insurance Premium a Lender-required settlement service, a Lender-required service, a settlement service provider
        identified by the loan originator which cannot increase by more than 10 percent.
        We are trying to get an extension to work this out but the sellers attorney has already sent an email that they intend to sue so Im not sure what to do. This being a holiday is not helping matters any.
        My closing attorney and agent is recommending we close then go after the lender after this to avoid the possibility of the pending lawsuit.
        As far as the type of lender I am not sure how to handle that. Their website says ” one of the largest privately held mortgage bankers in the country” I don’t want to put their name here.
        If the lender had given us the correct information initially we would never had made the offer we made on this house.
        Thank You for your prompt response

        • Robert,
          Having your mortgage insurance increase by that amount should also impact your APR which would trigger issues with TILA/REGz. I’m not certain if the mortgage insurance annual premium is part of the 10% tolerance or not since it’s a monthly payment and not a closing cost.

          No, I don’t want the lenders name – just was curious what type of lender they are… we are a mortgage banker as well – certainly not one of the largest :)… however, all disclosures are issued from our compliance department which is intended to catch mistakes like this.

          I am not sure if your closing attorney is a neutral third party (like they are in WA state) – if they are not solely representing you, I would probably get a real estate attorney asap to review your situation.

          I’m not an attorney and cannot give legal advice.

          Good luck!

  10. TallyHoMary says

    I’m a loan officer. I accidently sent a GFE that had a loan amount with a 0.00 rate and no fees. Five days later the consumer called me and told me the form had a 0.00 rate and no fees. It was clearly an error. I reissued the GFE. My lender fired me. They said now I owe them the loan amount and they are going to go after $9,000 in compensation on other loans that I have closed or about to close. I keep on thinking that the CFPB would realize that no one would get a 0.00% rate.

    Any thoughts?

    • No thoughts.

      We have a compliance department that sends our disclosures and would prevent accidents like this from happening. Sorry, TallyHoMary

      • In a situation like this (0% and no fees), would the lender have the option to decline the loan?

        A GFE is not a binding contract to actually fund the loan. The borrower has the right to request a reason for denial. Is “we didn’t like the terms on our own GFE” acceptable to the CFPB?

        • Good question, Rick. Honestly, my focus is on originating (compliant) mortgages… I would think that the CFPB wouldn’t be thrilled with “we didn’t like our GFE” as a reason to deny a file…but again, I don’t have the answer to that question.

  11. Recently got approved for a mortgage loan on a condo. Met with the mortgage several times dicussing our loan. She said we could do a 30 w/10yr arm with 5% down. I said I didn’t want to the 10 yr arm so she figured it at a 30 yr fixed rate w/5% down. We did agree to that, she sent a loan approval letter to my realitor. Knowing we qualified for the lian we went ahead with the purchase, sending our earnst money and setting a clising date. We made an appt to do the loan application, paid the application fee, signed all the papers along with the Good Faith Estimate. We were leaving the bank when our mortgage gal stopped us at the door stating she just realized she couldn’t write the loan as a 30 yr fix w/ just 5% dn. It was closing time and the start of the 4th of July weekend. She said she would talk to her boss on Monday to see what they can do. She called Monday and said they could not do the loan with those terms. Do we have a legal binding contract, does the consumer protection law come into play here? I feel we were miss led, what are my options….I’m running out of time !

    • Karen, this stinks. I suggest that you talk to this loan officer’s supervisor. What are their reasons for the program not being available and for finding out at this late notice? Depending on if the lender is a bank or non-bank will determine who you can contact about your rights. You can start with the CFPB (Consumer Financial Protection Bureau). Good luck.

  12. Hi, our mortgage was sold by BOA on May 2015 to a company of collector of debts and mortgage .
    First remark, the mortgage increased of 285$ a month they told us the reason was a shortage of escrow which it is probably right because BOA told us , the amount should be 1800$. This new Company estimated it at 3300$( huge difference)
    Second point we want refinance in order to reduce the term of our loan from 30 years to 15.(we bought the house on 21 April 2009)
    We receive an agreement and sign a GFE good faith estimate.
    We should close on July 27 . They Didngood it and keep asking us to wait for underwritter,to know 14 auk 2015 they avoid our calls and e mail.
    What can we expect from them according to your experience…we are first time refinancing ‘we never have a mortgage payment issue we both work we are stable and have good credit.
    Can we start looking for a new loan company.
    Thanks to bring us some good advise.

  13. Hi, I’m refinancing my home and lender has re-issued the GFE estimate 2 times.

    Original GFE numbers (1st issued):
    Title Services: $907
    Initial Deposit (all property Tax + Insurance): $1894.00

    2nd re-issued:
    Title Service and Lenders title insurance: $907
    Initial Deposit (all property taxes + insurance): $2464

    3rd re-issued:
    Title Service and Lenders title insurance: $1057
    Initial Deposit (all property taxes + insurance): $2771.28

    The other numbers have not changed and the only other number that i know will be different will be the Appraisal Fee: $575 (POC-B) which will actually be $475.

    Can the lender make these changes to section B of the GFE when they go over the 10% when compared with the original issued?

    • The amount the lender can go over is limited to 10% of those items subject to that tolerance “bucket”. So if something came in less, such as the appraisal, it may offset something that came in higher, like the title fee. When the lender re-issues the GFE, there has to be bona fide “changed circumstance” in order for them to adjust the fees.

      Property taxes and home owners insurance are not subject to the 10% tolerance.

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