Now I know that true miracles happen. We have all been waiting for RESPA reform for as long as I’ve been in the industry, which has been over 25 years. Here’s what the new Good Faith Estimate will look like. Everyone has all of 2009 to get their systems ready because the new form won’t go into effect until Jan of 2010. The winds of change are blowing in favor of more consumer protection and more duties owed to the consumer by retail mortgage lenders. Didn’t I just say this was going to happen? From HUD:
Brian Montgomery, HUD’s Assistant Secretary of Housing, Federal Housing Commissioner, said, “We have carefully considered the concerns expressed from every corner of the mortgage market in developing this rule. I am convinced that we successfully balanced the needs of consumers with those in the business of homeownership. None of us can lose sight of the fact that millions of Americans simply don’t understand all the fine print of their mortgages and this, in many respects, is at the heart of today’s mortgage crisis.”
Since 1974, little has changed about the process Americans endure when they buy and refinance their homes. Now, HUD’s final reform will improve disclosure of the key loan terms and closing costs consumers pay when they buy or refinance their home.
What I like about the new three page Good Faith Estimate (GFE):
Important Dates: “your interest rate may change” notice
Loan Summmary: Easy, plain language, Yes or No explanations
Understanding Estimate Charges: explains credits better than most verbal explanations I’ve heard over the past year.
Breaks down other charges that the homeowner can shop for, in order to receive a lower fee
Further explains pages one and two and makes it crystal clear what charges can and cannot change at closing.
What I do not like about the new GFE:
Where’s the Yield Spread Premium (YSP)?
Some state laws may not comport with this new federal law and will have to be revised, hence the year waiting period before we begin using the new form.