I couldn’t talk long enough about the constant roll out of new guidelines affecting home loans on a daily basis. Its certainly an interesting way to start a week  knowing what you know today may be little use to anyone tomorrow! The good new is that everyone is becoming more comfortable with the technicals that have become the new standards resulting from the financial reform act. Some of the better points here are old vs new. Here is one of my favorites.

Old Good Faith Estimate vs. The New Good Faith Estimate

The Old was a general list of fees that varied in style, size, shape, definition of terms, costs etc. A constantly moving target that had no responsibility other than to give you an idea of what the loan terms and costs possibly could be.  The lender was under no obligation to disclose any change in terms, costs, points or fees and buyers were often shocked at closing with little or no options but to close and bear it.

Move over Old and in with the New. The new is actually a very clear and standard form which gives the  the precise costs in one lump sum, broken down between lender charges and title/escrow charges. It must be exact and can not change in any way once disclosed or unless there is a changed circumstance affecting either the costs or the rate. These changes are very specific and the home buyer must be informed a minimum of three working days prior to closing of the loan. The catch here is that lenders can opt to disclose fees from a title/escrow company that the buyer would never use. Since the new laws require most title fees to be shown as the buyers responsibility even if the seller is paying them, the title services can be chosen by the buyer. Choosing to close some place other than the one listed on the Service Providers list on the Good Faith Estimate does not hold the lender responsible to the fees of the selected company. If choosing the title company listed on the GFE then each fee calculated in the title services total must be within a tolerance of 10%. Hallelujah! I’m a huge fan of the new process and how the consumer is given the access to his loan costs upfront. Additionally, the GFE explains important details, like Pre-Payment Penalties, escrow account, interest rate, fixed or ARM, if payment can change etc.