1.11.10

New Standard Good Faith Estimate

Mortgage companies rang in 2010 with a new standard Good Faith Estimate.  (A Good Faith Estimate is an itemized list of expenses and loan terms given to a buyer by a mortgage lender or broker) The U.S. Department of Housing and Urban Development put together a Real Estate Settlement Procedures Act Reform package  (the first reform in 30 years) requiring all mortgage companies use a standard Good Faith Estimate to present mortgage information in a “true and clear” way. 

Important loan terms and closing costs that may have been difficult to find and to understand in the past are now disclosed in a plain and simple format. Prior to January 1, 2010, mortgage companies each had their own layouts of the Good Faith Estimate making it difficult for borrowers to compare mortgage companies.  Now all terms will be presented in the same manner and consumers will easily be able to weigh pros and cons of what each mortgage company is offering.

Here is a preview of the new Good Faith Estimate:

Brian Montgomery, HUD's Assistant Secretary of Housing, Federal Housing Commissioner explains how he feels the Good Faith Estimate and the mortgage crisis are tied together. "Millions of Americans simply don't understand all the fine print of their mortgages and this, in many respects, is at the heart of today's mortgage crisis."

To help borrowers better understand the fine print of their mortgages, an instructional page is included in new (three-page) Good Faith Estimate.  Also, HUD-1 settlement statements now reference lines in the Good Faith Estimate making it clearer to borrowers where their stated costs are coming from.  

Overall, the new Good Faith Estimate seeks to eliminate confusion for borrowers and to help them to easily compare what different mortgage companies are offering. With these changes HUD estimates that the average consumer will save $700 at the settlement table- a pretty nice way to start the New Year.

“I provide comprehensive real estate sale services to home buyers and sellers in the greater Philadelphia, PA area including Montgomery County, Bucks County, Chester County, Delaware County and the city of Philadelphia.  I offer a complete education process for my niche markets such as first time home buyers, first time home sellers, and investors.  I have in-depth knowledge and experience in residential resales, new construction, foreclosures, sheriff sales, and short sales.  If you would like to buy or sell a house in the area contact me at 610-994-1148 to setup an appointment.”