Franklin Financial Group Blog

With a month and a half behind us from when the 2010 Good Faith Estimate (GFE) went into effect, I have had some experience both presenting the revised forms to borrowers and lenders. There has been some confusion with both parties, but it hasn't been something to halt the loan process (too much that is.)

The borrowers that I have presented and explained the new GFE have seemed to get confused initially with a few charges that must be listed according to the new RESPA guidelines, but once they understand why those items are listed and that they may not be applicable for their loan, they seemed to be okay with the new reporting method.

Lenders I have sent the form to are the ones that still either have some confusion regarding the forms, or more appropriately create additional confusion for brokers like myself, due to the fact that lenders' interpretation of the form can vary, and therefore so can how information is disclosed from one lender to another. The main hold up I've experienced is that until the new GFE is provided to the lender and is completed according to their interpretation, the actual underwriting process of the file can be held up. This can lead to longer processing periods and thus longer time periods from application to closing.

The new form requires additional time and attention both at preparation and deliverance. Accuracy is imperative due to the form protecting the borrower, and if errors are made when preparing the form, the originating company will be the one who compensates the borrower for the errors. This can be overcome by knowing the details of the transaction for the area the property is located. I am bound to provide an estimate of the costs of a loan to my borrowers, which cannot increase (some fees at all, some no more than 10%) by or at closing. To me this is an acceptable practice. I just don't feel we needed three pages to do what we could have done with one. Regardless, we do so there's no use fighting it.

Achieve and overcome. That's all any of us can expect of ourselves. Best wishes.

Are you aware that the USDA Rural Development loan is one of the last remaining 100% purchase (no money down) loans left? If you are looking to purchase a home that is located in an eligible area, the USDA may possibly allow you to financing the entire purchase price. There are even provisions where you can finance more than the purchase price if the home appraises for higher than you are paying for it. Limitations apply for how much above the price you can borrow, but for example, you may be able to finance some appliances for the property as part of the deal.

The Rural Development loan helps do what its name implies; develop rural areas. Surprisingly, homes located in an eligible area are not necessarily that far away from suburban areas. I am doing one of these loans right now and the property is located only about 15 minutes (driving time) outside of the I-275 loop around Cincinnati. Of course the closer you get to a metropolitan area, the harder it will be to find eligibile locations.

If you are willing to drive a little farther to and from where you will live, this program may be something worth looking into. For more information you may want to visit the USDA Rural Development website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1