Franklin Financial Group Blog

The 2010 RESPA changes to the Good Faith Estimate (GFE) are certainly a bit confusing at first, and that is to someone in the lending industry. I can't imagine what they will be like for the consumers. After multiple training sessions regarding the changes, I now understand how to make the new GFE a part of my business. Certain fees on the form, once provided to a borrower, cannot change at all (zero tolerance) and some can change slightly (ten percent tolerance) between disclosure and closing or settlement. Additionally some fees must be listed on the GFE that may not end up being paid for by the borrowers at closing, but due to being included will certainly at first look make borrowers feel as if if their closing costs are higher even though they may not.

Another change to the form is that fees that have been itemized on the present GFE will now be consolidated into "blocks" of fees as totals. Personally I feel that itemizing is less confusing and shows more detail, but apparently the powers that be felt otherwise.

If borrowers "float" a rate (don't lock it in) at first, they will be provided on GFE, then when they lock their rate they will be provided another final GFE. Certain fees on the initial and final GFE cannot change no matter what. I do like this part of the changes as it allows borrowers to obtain their figures initially and then see the final numbers as they relate to certain interest rate. I think this is better and full disclosure, however I don't feel that the new 3-page GFE is necessary to do this when it could have been done with the old 1-page GFE. I have asked this question before, but what happened to the Paperwork Reduction Act passed by the same Government now requiring three times the paper for one specific form, generated often multiple times for each borrower on a mortgage loan transaction?

Change is not always easy and the RESPA changes for 2010 are certainly at first not going to be. As a matter of fact, in order for everyone in the lending transaction to make sure they are RESPA compliant, additional time per transaction should be expected to be required. As a result, mortgage loans that could were being closed in about 30 days may now take at least 45 to 60 days (or longer). If you are a seller, buyer, realtor or mortgage industry professional, be ready to be more patient and understanding as these changes begin to happen.

Consumers are the ones who are focused on being protected by these new changes. If you are a consumer and have questions or concerns about the new RESPA changes, please visit the following website:  http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm. Here you can find further information and be able to contact HUD should you wish to.