Juicy Estates: Mortgage Blog

49% Say Good Faith Estimate Waste of Time

In 2010 HUD rolled out it’s long anticipated revised good faith estimate that all lenders are required to use in residential real estate transactions.  The new good faith estimate was supposed to add transparency to loan terms and closing costs and was supposed to aid borrowers in shopping for the best mortgage to meet their individual needs.

I can say without reserve that the 2010 good faith estimate is an unmitigated disaster.  It fails to acheive most, if not all of it’s intended goals and she be given the lofty title of “Worst Goverment Form Ever“.  It is not only poorly conceived and designed but doesn’t provide some of the most important information that the consumer needs such as…their total monthly payment.

Most of us in the industry would prefer to spend time in line at the DMV then try to explain this form to a borrower, because it is un-explainable.  Stare at it for a few minutes and your eyes will bleed.  And of course we have the added fun of trying to answer the ultimate question from our clients ”where does it indicate the total monthly payment?”….the answer…it doesn’t!  As indicated in this article from The Real Deal Miami 49% of those surveyed deemed the form “a waste of time” and to complicated.

In my career I have the pleasure of working with many South Florida professionals who have a clear understanding of finance and I have yet to meet one that thinks the 2010 good faith estimate is worth the paper it is printed on.  That being said I would be remiss in my professional responsibilities if I didn’t offer a solution. 

The regulatory bodies that govern the mortgage industry require that we use the standardized form however most seasoned mortgage brokers and bankers will also provide a loan closing cost worksheet that is compliant and provides significantly more detail.  If your mortgage banker or broker does not provide a closing cost worksheet then ask that the settlement agent provide a preliminary settlement statement that you can review with your mortgage banker or broker.  Oh and ask them to calculate the total monthly payment for you, because it might be nice to know how much you have to pay each month…..

This entry was posted on Friday, May 6th, 2011 at 4:11 pm and is filed under Home, Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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