The rules outlines in RESPA changed and it is not possible to get a GFE before paying an application fee. This means comparison of fees is now impossible. This means the borrower is blind, or is forced to rely on verbal statements.
A loan is like any other purchase. Something of value is exchanged for payments. Why would anybody pay an application fee, and then discover the costs of what they are buying after the fact? This RESPA rule removes the ability to bargain, it removes an early full disclosure and makes consumers pay more.
I agree with your comment, however, if Caden asked me for a GFE, and after he reviewed my GFE compared to another lender, and he then chose to work with me, I am bound by that GFE I gave him. I do not then get to go back and get "more accurate" fees and update my GFE, unless something significant changes about the transaction.
I will also say that HUDs new regulations are not crystal clear. So a lot of the discusison you are seeing here is becasue every mortgage company has had to find their own way to intrepret the new regulations and figure out how to execute new policies and procedures to meet the expectations of HUD. I would suggest to you to go with the lender that has been the most up front with you and the one you know will be able to get the loan done for you. We are all navigating new waters while still trying to do the best job for our clients.
I am sure you will choose the right lender for you!
Also, if I know that a client of mine also wants to put in application with another lender, I don't want to deal with them. I don't care if they speak to other loan officers, get GFE's from them, whatever. If they do not trust that I will do the best for them, they can apply elsewhere, because although there might be other people who will be as good and as honest, I am confident that they will not find anyone better or more honest.
GFEs do apply to a specific house and loan program whereas good faiths do not. I don't see how the appraisal issue even comes up. I have never heard of an appraisal being ordered at the stage you're talking about. If you need help I would be happy to recommend a good lender.
Best of Luck,
Also, I work for a company that is large enough that we will get audited. I feel that the abuses are more often with loan officers from small companies who no one is going to bother with. It is going to be the same thing with the new licensing requirements and passing the test. There will be ways that small shops will get around that by licensing only 1 person, and putting all loans in their name.
I thank you for asking your question in this forum. I think many of us are enjoying the information exchange. I know I am!
- provided your full name
- provided your income information (paystubs, W2s)
- your social security number so we can pull a credit report
- a property address
- an estimate of the value of the property
- a loan amount
- and any other information deemed necessary.
The reason is if a GFE is issued, then the fees are "locked in" for 10 days. HUD states that if a GFE has been issued, then that means you have provided all of the required information. If you have not provided all of the information, and if a lender issues a GFE anyway, and it's later determined that one or more pieces of information that was supposed to be provided (but wasn't) and is erroneous from what you stated, and if because of the ommitted information that the lender should have known results in a higher fees for your mortgage, the the lenders have to "eat it." The lenders can not pass the increased cost onto you. Lenders could potentially be put in a position of providing a mortgage to you at a loss.
Result? If you don't provide the information, you won't get a GFE. If you want a GFE so you can compare costs, you will have to provide the information listed above.
I am a mortgage broker and just wanted to confirm what Julie said below. Her explaination is right on!
The new GFE is causing a lot of confusion not only for consumers but even for the mortgage industry during this roll out period. The bottom line is ... the new rules will be better for the consumer as the "bait and switch" game will no longer be possible (at least from those who want to keep their licenses).
All the Best,
Since this is all brand new and lenders are now held fully accountable for inaccuracies, I suspect most of us are being super cautious in delivering a binding GFE. There's still a lot of confusion and most are still getting up to speed on what can and cannot be done to remain RESPA-compliant. I think HUD's intentions are noble and the changes are headed in the right direction of standardization and full disclosure. In the end, the hope is that this will flush out and put an end to deceptive practices in fee disclosures. It's by no means perfect, but we'll have to all work thru it.
My suggestion would be to determine who you're most comfortable with and commit to working w/ them. I'd advise against bailing from one or the other for a tiny difference in rate/fees. As the saying goes, you typically get what you pay for...and with such a large financial decision, holding out for the lowest price provider may come back to haunt you. Good luck.
The form's at http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf
Six items are needed per RESPA
1.) Borrower's name
2.) Borrowers monthly income
3.) Borrowers SS#
4.) Property Address
5.) Estimate of Property value/purchase price
6.) Mortgage loan amount
They appear to have all six items needed if the have a copy of the contract and counter even if not signed and only have 3 days to get you a GFE. Remind them of the 3 day requirement..... Refer to the HUD link below.
Unfortunately, most of what you have written is true. HUD does not want us issuing a GFE until we have an official application. We do not have an official application until we have 6 elements, once of which is the property address. We do not have a property address until we have the ratified purchase contract. It is an extremely frustration situation.
The reason for this is that this GFE, which stands for Good Faith Estimate, it actually more of a Good Faith Commitment, as of January 1st, 2010. Most of the fees we quote are binding, and we cannot quote binding fees until we understand what has been agreed to in the purchase contract.
The new GFE is designed to protect you, by forcing us as lenders to be much more accurate with your fees, right from the start. For example, it is impossible for us to quote accurate title and escrow fees until we know who the title and escrow company is. These new regulations will just change how you shop for a loan, and it will likely length the escrow periods, but in the end, it will mean no surprises when you sign your loan docs.
The good news is that you can start loan applications with two lenders at the same time, get both GFEs and then decide. They cannot order an appraisal for you until you have accepted their GFE, by siging an "Intent to Proceed" form. The only thing you will be out, with the lender you do not choose, is your credit report fee.
Good luck! And congratulations on the house!
See my blog post on this topic at http://www.trulia.com/blog/dave_sutton_windermere_walnut_cre
Also, a general question why is HUD trying to make rate shopping hard for consumers?