The new mortgage disclosures 2010
This is national change.... so it affects or is that effects (those are my worst two confusing words, affect and effect...)
The changes in disclosures, the Good Faith Estimate changes touches us in Columbus as it does consumers all over the country. This is a Re-Blog of mortgage information from a Florida loan officer, Gerry Suarez Jr. of Thomas Mortgage. Thanks Gerry for allowing this Re-Blog of your opinion of these changes. I think Gerry's "road to hell" caught my attention.
At Real Living HER in Worthington we've been introduced to some of the upcoming changes for consumers and us through our inhouse loan officer. Changes. I am going to a class next week (between Christmas and New Years) about the class that another Central Ohio bank is offering.
The new mortgage disclosures 2010 - the best intentions?
We'll get through these changes...
Happy New Year!
Beginning January 1stthe new and improved Good Faith Estimate (GFE) will be required for all mortgages. What does this mean to you the consumer? It means you will be confused like never before.
That's not the intent behind the new disclosure. Indeed our government spent upwards of 7 years researching and perfecting a form that would make shopping for a mortgage as transparent as possible. As they say the road to hell is paved with good intentions; and although this new disclosure is intended on improving consumer's understanding of the loan they are applying for, it falls woefully short.
So why is this new GFE so bad? Let's start with the fact you are never disclosed your total monthly payment. Worse yet, you are never disclosed how much cash you will need to complete the transaction. The form simply addresses information pertaining to the mortgage loan, and does NOT even provide for discussion of your taxes, insurance or other costs.
The new form also requires lenders to commit up front to the total they will charge you. A great idea you say? Yes, except the requirement is so draconian that lenders are now forced to disclose the worst case scenario, before they may know all the particulars of your loan. Would you like to guess how many lenders will drop their fees once your scenario doesn't play out as bad as expected? This will certainly result in borrowers actually paying more costs for loans, regardless of how hard they shop.
Let's look at an example. Say you are refinancing and are unsure what your home is worth (does anyone know what their home is worth anymore?) and when the appraisal comes in it's a bit short of the value you needed. The lender will be charged "loan level price adjustments" accordingly but unless he disclosed these costs he can't pass them on to you. This requires the lender to price that adjustment on any loan he MIGHT have to pay it on, which in turn means you will have to hope he is honest enough to drop the cost if it doesn't apply. Most lenders will be honest enough to do the right thing, but you don't need protection from them. An unscrupulous lender will have every chance to overcharge you for a loan, and that's what these disclosures should prevent.
The bottom line is you can't legislate morality. Know who your lender is and get references from past customers and industry professionals. An ethical, knowledgeable lender working with you to accomplish your goals can make all the difference between a good deal and a rip off. Shop for your loan, but shop for your lender just as hard!
This post provided by Maureen McCabe HER Realtors*
Contact Maureen McCabe of HER Realtors* - 614.388.8249
email: MaureenatMaureenMcCabe.com at = @
*Real Living HER
Information is deemed to be accurate but should be verified to your satisfaction. Information provided herein is supplied by several sources and is subject to change without notice. Opinions expressed are solely those of Maureen McCabe.