Is the new mortgage Good Faith Estimate (GFE) really Transparent
The new mortgage disclosure form required to be used as of January 1, 2010 commonly known as a GFE (Good Faith Estimate) in my opinion doesn’t adequately accomplish Washington’s goal of complete transparency.
In a recent blog post I put on Active Rain I identified all of the fees that are charged to a borrower are lumped into one number. If all the costs that a mortgage loan originator can charge are in one number it will open up opportunities for a borrower to be confused as to what the charges amount to. Since these charges for completing a mortgage are for the most part not changeable a loan officer is going to charge as much as possible. The reason for this is, if the borrower completes the loan as quoted in the GFE it is locked in with very little variance. As an originator if the charges exceed the costs that he quoted it could cost him (the loan officer) money. Most loan originators are not going to be willing to pay to provide a mortgage for someone and have it cost him money.
Having all the charges lumped into the one line could also be confusing to the borrower. Transparancy should allow a borrower to identify all the costs in a line item format so an educated decision can be made.
I personally think that we wouldn’t have been here if Loan Officers, Mortgage Brokers, Realtors and other Real Estate Professionals would have reported fraudulent, misleading and sub-prime loans, especially those with 4 plus discount and/or origination points within the last 5 year. But silence was the norm, and now we are complaining that non real estate professionals have set guidelines that don’t make sense. Where were the blogs pointing out the slime balls that took our industry down; and long with it – took our entire American economic system for a ride.