Archives for March 2011

The Mortgage Porter: Comment Policy

Every so often, I start writing a formal comment policy and it seems to wind up on the back burner.  A few years ago, I decided to have comments approved before being published on Mortgage Porter due to some very spammy,  self-promotional comments that mortgage lenders were leaving.  I welcome comments on my blog…but I will not tolerate spam, self-promotional comments or anything vulgar.

I reserve the right to edit comments if needed…typically this would be removing self-promotional.  You do not need to add your url or titles–please use the links provided in your signature line of the comment for that.  I may be adding advertising to this blog in the future and if you're interested in paying me to promote yourself, let me know. 

I reserve the right to delete comments that are pure spam and that add no value to the conversation or that are vulgar. 

In addition, as everything on this blog is my content, I will not tolerate plagiarism.  If you wish to refer to my content or use an excerpt from one of my post, I'm flattered, just do so with a link back and proper credit to me.  This blog and all content (text, photos, videos, etc.) is protected by US Copyright. 

I've been writing Mortgage Porter since late 2006 and it's become a wonderful way for me to connect with readers and to work with new clients who are seeking a mortgage for a home in Washington State.  

Bottom line, I would love for this blog to be a place for discussion and conversation.  If you have questions, please contact me. 

Be nice and we'll all get along.  

When Can a Good Faith Estimate be Changed?

Someone recently landed on my blog by searching:  "can a bank alter a good faith estimate?".

The answer is yes IF there is a qualifed changed circumstance or IF the good faith estimate has expired.   If the mortgage originator made a mistake with a good faith estimate (regardless of how human the mistake may have been) they still cannot reissue the good faith until it has expired.  This is why many mortgage originators or loan officers are still hesitant to provide the good faith estimate that HUD created last year.

Even though HUD created their GFE as a tool for lenders to shop, they have decided that the addition of a property address is not a valid changed circumstance — meaning that mortgage originators cannot reissue the good faith estimate because someone has gone from being "preapproved" to in a bona fide contract.  From HUD's FAQs dated April 2, 2010: 

"…if a GFE is issued wihtout a property address, the future receipt of the property address is not a changed circumstance that would allow the loan originator to issue a revised GFE."

So if an LO issues a GFE without an address, they are bound by those cost (subject to certain tolerances) if the buyer accepts the GFE prior to expiring.   This is why MLOs (mortgage loan originators) have been issuing rate worksheets prior to having a transaction.  However, if the MLO has received the criteria HUD had determined is an application a Good Faith Estimate must be issued within three days or the loan must be denied…this tends to happen more often with a refinance than a purchase scenario due to the valid address component.

When does a Good Faith Estimate expire?  


If a borrower does not express an intent to continue with an application within ten business days after the GFE is provided…the loan originator is no longer bound by the GFE.

It's a minimum of ten business days (two weeks) after the Good Faith Estimate is issued to the borrower that the mortgage originator is liable for the good faith estimate.  If the MLO forgot to include the owners title policy fee (which the buyer doesn't pay for) they (or their employer) may out hundreds of dollars.  On a $400,000 sales price, an owners policy runs about $1000.  That's a hefty penalty to a mortgage originator for something the buyer doesn't even pay for in Washington state or that has nothing to do with the mortgage.   Another expensive mistake is if the MLO forgets an upfront funding fee that FHA, VA or USDA loans have…HUD does not allow any wiggle room for human errors once that GFE is issued. 

With all that said, President Obama's new Consumer Financial Protection Bureau is working on drafting a new Good Faith Estimate that is suppose to be friendlier (to conumers) which will also combine the Truth in Lending.  Watch for this new document to be created by June 2012…with new guidelines on when a good fiath estimate may be changed or reissued.

Spring Forward Seattle

It can be tough picturing spring with all the rain we seem to be enjoying in Seattle lately.  In spite of the grey days, I do love spotting the signs of spring.   Here are a few photos I captured in my neighborhood.


Drops of rain on a cork screw willow.

Jonquils or Daffodils…I'm not sure?

By now I'm sure you've set your clocks forward one hour…this is also a good time to change the batteries in smoke detectors and to check your emergency safety kits at home (or create one). 

Have a great day!

Sunday Drive to Mount Baker

We decided to spend the long Presidents Day weekend at Mt. Baker with our kids for a short family vacation.  We rented a condo at Snowater, in Glacier, just minutes from snowboarding, skiing or inner-tubing in the beautiful scenary of Mt. Baker.   The condo at Snowater is located just off the north fork of the Nooksack River and did not have internet access or cable tv…yep, we were unplugged for the weekend and it was wonderful!   Snowater does have other ammenities (indoor pool, ping pong, etc.) which our kids really enjoyed.  A majority of our time was spent on Baker. It takes about 2-3 hours to reach Mt. Baker from Seattle.   Do check driving conditions (chains may be required) for Baker.



Check out the more of my photos of our Mt. Baker vacation by clicking here.  By the way, I used my new Sony Bloggie (pocket camera) to capture these photos.

Which Fees Can Change on a Rate Quote Worksheet

When a home buyer is shopping for their next home, they often request written rate quotes from mortgage originators to see a detailed list of closing costs and an estimated total monthly mortgage payment.  Before HUD mandated their Good Faith Estimate in 2010, they could rely on a Good Faith Estimate.  Due to the liability a mortgage originator may incur on issuing a GFE before the buyer has a purchase and sales agreement (in contract to buy a home), a buyer would be hard pressed to find a mortgage originator is allowed to issue a GFE pre-contract.  In addition, HUD's GFE does not include the total mortgage payment nor funds required to close the transaction, so it's not best tool for a buyer. 

In lieu of issuing the Good Faith Estimate, mortgage originators can issue a written "rate quote worksheet" which may have different names by different lenders.  Just like the old GFE, the rate quote worksheets also vary in appearance from lender to lender as they had to be created by lenders as a result of the limitations of the HUD's GFE…they are not a standardized document.    The written rate quote worksheet should contain all the same information as the good faith estimate did prior to HUD's 2010 GFE as well as the APR.

The rate quote worksheet is simply a tool to provide an estimate of closing costs as well as what current rates are available if the home buyer were locking at that moment. 

Some fees on the quote can change, including:

Title Insurance and Escrow.  There are several title insurance companies located within each county.  Home buyers DO have the ability to select their title and escrow providerand some offer discounts when you use title and escrow from the same company.  They may discover that their real estate agents try to control who provides this service.   Often times, listings have a title committment prepared by the listing agents preferred title vendor (sometimes called a "TBD").  Until the mortgage originator knows who the title and escrow company are, this fee is an estimate and the fees do vary.

Property taxes.  Property taxes are in the mortgage payment as well as the prepaids/reserves section of the mortgage quote.  The number of months required to collect for reserves may varies based on when the first month's payment is due…so until there is an established closing date, it's a "best estimate".  NOTE:  I use 1.25% of the sales price divided by 12 months, unless I am provided a different figure to use for taxes.  Property taxes are specific to the property that is purchased…and property taxes may change over the years (impacting your mortgage payment).  

Home owners insurance.  Home owners insurance is in the payment as well as the prepaids/reserves.  This fee can vary based on who the provider is (selected by the home buyer) and the amount/type of coverage they request.

Prepaid interest.  This will be based on the very date of closing, paying interest through the end of the month (because you now own the home and have a mortgage).  Until we have that contract, most lenders will use 15 days of interest for purposes of a rate quote.  Closing earlier in the month increases the days of interest and later in the month reduces the days of interest.

Of course, how the loan is priced once the rate is locked (with or without discount points) may also change as the home buyer may not decide this until they know the what pricing (what rate at what cost) is actually available until the moment they are able to "lock".

This post was written based on a question from a home buyer I'm working with in the Seattle area.  If you have a question regarding mortgages that I can answer on Mortgage Porter, contact me!  You just might read your answer on my blog.