After years of trying it seems that we are right around the corner from the much anticipated new and “improved” Good Faith Estimate.  The idea behind this estimate is to change the wanton disregard that many originators in the past had used when “dispensing” these pieces of important paper.  Now under the rules and regs that take effect come January 1, 2010 when an originator issues a Good Faith Estimate to a client:

  1. The rate must be good for a period of time (can be as short as one minute)
  2. The closing costs listed must be valid for 10 business days
  3. Nothing is marked as being paid outside closing, a favorite trick in the past to appear to the consumer that one originator had lower costs then another one that did not mark this box
  4. All bank and originator charges are written in stone and cannot vary except under VERY LIMITED circumstances
  5. A list of providers of various services listed would need to be provided.  If you used a provider from this list their fees could not exceed the stated pricing by more than 10%, and if they did the originator of the loan would be refunding you money. If you chose a provider that is not on the list then there is no limit as to the variance of their fees.
  6. Escrows could vary based on the actual numbers, taxes and insurance and dates due

So you ask is there anything bad?  Well in my opinion there are two major items missing from the list: 1. Their is no signature requirement 2. The total amount of actual cash you need to close the transaction is not listed anywhere on the form! 

Lastly, in order to get a Good Faith Estimate you need to present 6 items of information:

  1. Property Address
  2. Loan Amount
  3. Monthly Income
  4. Estimated Value of the property
  5. Borrower Name
  6. Social Security Number in order to pull credit

I agree in principal that a change was needed, I feel that this well intentioned law was rushed through with a little bit more thought it could be an excellent change for you the consumer. What are your thoughts?