GFE: New paperwork meant to protect buyers creates new headaches

Lets not act surprised. New headache to some that have to actually work and explain the package in detail. Ah those days of zooooming by… sign here, initial here are long gone.

That YSP is just a fee we can add to your mortgage…”We can roll it into the mortgage so you don’t need to bring any $$ to the table”. 

WASHINGTON – April 26, 2010 – As the real estate industry makes the transition to a revised Good Faith Estimate (GFE) launched by the Department of Housing and Urban Development (HUD) earlier this year, feedback from lenders and consumers suggests that the new process may be confusing and impractical.

Closings have been dragged out as brokers and title insurers strive to understand the longer, more detailed document and explain it to home buyers; and some lenders have been forced to create their own forms in an effort to explain what is reflected in the GFE.

The GFE changes are well-intentioned, aiming to provide new transparency on costs to buyers, who have long complained of hidden fees; better allow comparison shopping between lenders; prevent kickbacks and referral fees; and make lenders more accountable for mistakes or misrepresentations.

But, says Pava Leyrer of Heritage National Mortgage in Grandville, Mich., “borrowers are looking at this form and saying, ‘This doesn’t make any sense for us, why can’t we have something that’s more simple?'”

Among the areas causing confusion are previously itemized costs that are now are lumped together; the inclusion of some seller-paid costs, like title insurance fees, that inflate the estimate by thousands over what the borrower would actually pay at settlement; and the absence of a total monthly payment estimate on the GFE, which borrowers must now calculate on their own by referring to other documents.

Source: Boston Globe (04/23/10) Sainz, Adrian

© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688

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3 Responses

  1. American Home Mortgage Acceptance in cooperation with Lehman and Bear Sterns created a subsidiary trust, special purpose vehicle that issued $3.5 MBS backed by $3 Billion principal homeowner promissory notes. Its in the prospectus. AHM 2004-4 Trust Series.
    The spread was known no later than 3 months after loans were made Fall 2004. The spread likely was locked in ahead–so they knew how to spread it around. Now this is the kind of information I would like to have disclosed to me. In this world of finance they have just moved the fees and hidden charges a few levels upstream where its really hard to see them. We all would like to know that our $200,000 mortgage note was resold for $275,000–same day!

  2. If you recall it. One has a free month before making a payment.

    We thought they were being nice…whilst they were slicing, dicing away and arranging their cut off and closing dates.

    I wish I had the man power to televise the world exactly what went on. One has to go back to around 1998-1999.

    • Sure; a whole month till the first payment –but then the 12MTA 1.25% interest rate reset to market plus the bonus rate——-the 12MTA was defined in the documents as a yearly reset——six months coupons for pmts at the illusory teaser rate

      then the bills start to come showing there was negative amortization instead of reduction in principal–starting with the very 1st pmt

      then you call to ask whats wrong with this–how did you go negative? Bookkeeping error? Well as any predatory loan victim should know, nobody answers the phone but the auto-answering machines that pass you around for awhile——then you give up and leave a message—dont hold your breath

      over and over-but the trick is to let a payment go 3 days over—no problem with phones then—-thats where all the working phones are—-calls 6 times a day—-why–never missed a payment in 25 years–but now you are a deadbeat———telephones then restart when they file foreclosure papers

      we can work it out they say—-yes lets we say—-they say “well get back in a couple days–oh and by the way–nobody ever goes after deficiencies” —–but they never call to work it out——- -they just want you to let the clock run on the answer and default– —subtle interference with your legal right of access to courts to redress grievances

      they send a kid to knock on your door and leave a note pinned to it——–“would you like to modify?” -you call the number and they laugh and say ” we just wanted to see if you moved out? -guess you didnt ha ha!

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