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Why All The Confusion About The Good Faith Estimate 2010

August 3, 2010 by · Leave a Comment 

Although the Good Faith Estimate (GFE) 2010 became effective nationwide on January 1st of this year, there is no other federal form in the home loan application package that creates more anxiety and confusion. 

The Good Faith Estimate is suppose to help consumers become better shoppers of real estate settlment services by creating more transparancy of home loan fees for the borrowers, which also happens to be one of the primary goals of RESPA (Real Estate Settlement Procedures Act of 1974).

So…why all the confusion then?

On November 17, 2008 the US Department of Housing and Urban Development published new RESPA regulations that created a tidal wave of regulatory change in the real estate industry. Watch this short video.

Here is a brief recap of both the good and the bad highlights of new Good Faith Estimate 2010.

Good Faith Estimate 2010 – PROS:

  • Discloses if a borrower has an escrow account
  • Discloses the rate lock period to the client
  • Discloses to the borrower if the rate can adjust

Good Faith Estimate 2010 – CONS:

  • Borrowers total housing payment (PITI+MI) is missing
  • Borrowers cash-to-close is not shown
  • CANNOT issue a GFE without having a complete loan application

In HUD’s effort to simplify the disclosure of home loan fees, they took a one page document with itemized breakdown of estimated costs and converted it to a 3 page discosure with lump sum totals.

Still confused? Don’t fret. There is also a mandatory, 48-page supplemental, HUD’s Settlement Cost Booklet to help clarify any questions you may now have. Otherwise, contact me anytime for all your mortgage needs.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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