Financing in Fort Wayne>Question Details

Charlie Putt,  in Fort Wayne, IN

How tough is the new GFE for everyone to understand?

Asked by Charlie Putt, Fort Wayne, IN Tue Feb 23, 2010

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Tony Grech’s answer
Hi Charlie
Although in theory having consistent guidelines that everyone needs to conform to is very desirable, the execution of this seems to me to be off.

The toughest part of it for me has been that costs on the new GFE are a "worst case scenario" as opposed to what the costs will actually be at closing. There are some items which are normally paid for by the seller here in Michigan, such as transfer tax and owners title insurance, that have to go on the GFE.

It takes a lot of effort to explain this to the borrower and not make it sound like you're trying to pull a fast one on them :) It makes it even more important to work together with their realtor to make sure our customer understands. It also makes it imperative that we touch base with the title company early in the process to have them provide the borrower with ACTUAL costs.

I think this creates more work for ethical lenders who've always disclosed things properly anyway. It's just a shame that we're forced to work more to make up for those shady lenders who've relied on the old bait and switch.

Just my two cents...I'm interested in seeing what others have to say
0 votes Thank Flag Link Tue Feb 23, 2010
@ Tony Grech: we used to be the pothole kings here in PA, glad to hand the title over to you. Now, if you could kindly hand the NHL title back to Philly, or even an NBA championship, we'd be forever grateful (we'll just stay away from football LOL)
0 votes Thank Flag Link Tue Feb 23, 2010
Exactly. It just frustrates me when politicians pat themselves on the back for "looking out for the consumer" without discussing logistics with us folks working in the trenches.

I'm sure we'll figure it out, but for now this is causing a mess. Hopefully it's just a minor speed bump as opposed to a big pothole (for those who've driven on Michigan roads LOL)
0 votes Thank Flag Link Tue Feb 23, 2010
What we really don't know yet is how they are going to police this. Are they going to spot check every "x" number of loans to match the GFE with the HUD? Who ever thought this would make things easier for the borrowers to understand?
0 votes Thank Flag Link Tue Feb 23, 2010
When I heard someone in the business say the Government did not consult a mortgage broker or banker NOR a title agent NOR a Realtor to design the new document, I knew we were all in trouble. Never in a gazillion years did I expect it to cost ME money, now it is just a question of how much (per transaction???? stay tuned).
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0 votes Thank Flag Link Tue Feb 23, 2010
I saw this question, and am surprised to see it being asked by another LO. The biggest problem here is that seeing as none of want to have anything taken out of our pay because we misquoted, or were off by more than 10%, we over-quote. We had the issue about putting transfer tax on the GFE as well. In MI you probably have more short sales and foreclosures, so it is more of an issue, but my company has determined that if we know it is not a short sale, foreclosure or new construction we do not have to disclose transfer tax. In NY we also have bank attorneys that have to be disclosed under settlement costs, so we jack that up in case for some reason there is an additional fee. Not to mention that if the person's attorney orders the title, they could be given much higher fees here for searches and recording.
Page 1 of the GFE also has its plusses and minusses, but you can clearly let someone know that the rate quote will not last. The question about interest rate rising is OK, if they only explained what they were really talking about. Clearly no professional really put this together.
0 votes Thank Flag Link Tue Feb 23, 2010
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