New Good Faith Estimate will level the playing field for borrowers comparing loans
In essence, HUD is working to bring lenders up to the same standards, methods of reporting closing costs and for estimating fees so there is no last minute surprises when the buyer reaches the closing table.
Here are some important points:
1. All fees paid to the lender/broker are to be consolidated in one line, including processing fees, origination fees, etc. These charges cannot change from the original estimate without a material change to the loan requested.
2. In the event fees are being charged to obtain a lower rate, these are to be broking out and itemized for the borrower’s ease of comparision to other loan programs.
3. Estimates for fees from government recording charges and third party settlement providers to be itemized and the lender is held to a tolerance of 10% for their accuracy.
4. Estimates for services that the buyer can shop for and do choose can change at settlement without the lender being held accountable. This can include title charges, homeowner’s insurance, and initial deposits for an escrow account.