Good Faith Estimates -- Knowing the basics - A must read !!!

Jeff, again, a very informative post for all who are considering either a new home or a refi.  Thanks for taking the time to post this.

Don't forget that when shipping for a mortgage, the buyer (or Lenn) should get all of the GFEs in the same time frame.  Things can change from day to day and even from morning to afternoon.

TIM & PAM......   my pleasure and thank you very much for the compliment.

LENN..... damn... I got so caught up with the time frame, I forgot one of the most important parts when shopping for a mortgage. Yes, rates can change daily and they should get all the good faiths in the same day. If not, it's irrellevant and the client can sometimes shop themselves right out of a mortgage.  Great point... and as you can see, I added a # 5... thanks

Jeff, good information. It is interesting that the TiL is a result of a law that was entitled "Simplification of Interest," and it did anything but. Yes, time frame is important, but I think the same day may not be close enough any longer. When we can get 2-6 changes in a day, same day pricing could be a lot different.

Jeff, Great article! So many buyers don't understand the GFE at all and it is such an important part of the process. Many lenders do not explain, at all.  It is SO important to compare apples to apples.  I make sure I do this for each and every client.  I'm going to repost this on my blog if you don't mind. Great info for consumers!

Hi Jeff,

I always ask my clients when shopping for a loan to ask for a good faith estimate. Some lenders do not give it to easily.

Great post!

Jeff - once again you have written about a key topic in the purchase transaction, and one where there are so often errors and omissions, or no GFE at all! Buyers don;t know that they are supposed to receive this, adn when they do they often do not understand it nor know the questions to ask.

Jeff

Great and important information.  Agents also need to know GFE's and what all the fees mean to help their clients compare.

Have A Great Day

Jeff,

Great post !  And so true... we have seen in some cases where it has been pulling teeth to get the GFE from the mortgage company to the buyer.  And then when you finally do get it you know why !  Sometimes, being a buyers agent, the mortgage professional has indicated they cannot send the GFE to me... usually another red flag.   What is worse is when the buyer really wants to use the mortgage person that is screwing them !!!  Is remarkable sometimes.... But the good stories we have been able to save buyers midstream where there was enough time before settlement to switch mortgage professionals after we reviewed the GFE for our buyer clients.

OK I Love the Monkey rate quote crack! LMAO, sounds like a good name for DBA "Monkey Rate Quote.com"  LOL   ok I'm tired....

An important topic. As we try and empower/educate borrowers, they sometimes still can't get out of their own way. The important thing is that they atleast learn how to sniff out the unscupulous Loan Officers.

Jeff than you so much for the informative article.

Jeff,

I can't tell you the disaster a client of mine just had working with a lender who solicited them over the phone.  The lender lied about everything and never produced a GFE.  It was my first dealing with a predatory lender and hopefully my last. 

Jeff, good post. The reminder to get all the estimates in the same day is great.

Jeff, great post this should be written as a brochure for consumers.

www.flyingzg.com  

In Flyingzg.com sever all different kinds of wristwatches are discussed : for a fuller description of these ,reference should be made to the Glossary of Terms.

   A Mechanical watch(which by definition must have more than 120parts) powered by a mainspring within what is called a barrel: the mainspring is would by hand or automatically by a rotor ,transmitting power to a complicated set of interconnected wheel;this is called the gear train.The Train in turn is connected to the escapement mechanism,which consists of a wheel and pallet fork ,which ,again in turn,transmits impulses to the balance wheel,making it oscillate.this oscillation provides the " tick" of the mechanical watch.there is a further train of interconnected wheels carrying the hands indicating the time .the rotor on an automatic or self-winding mechanism incorporates a weight ,which swings backwards and forwards whenever the wrist moves .these oscillations are converted into a rotary motion with a gear train which winds the mainspring.Over 1850 different operations are involved in making a mechanical wristwatch and over 1000 tool are used .

There are various contemporary variants on the traditional hand-would mechanism.automatic watches ,for instance,rely on wrist and arm movement for winding power,though this assumes they are worn constantly.they are also designed in such a way that it is impossible to over-wind them ,an electronic wristwatch is powered by a quartz crystal.nowadays these crystals are grown under laboratory conditions to ensure greater purity .the principal components of quartz watch are a battery ,a step-motor,a quartz resonator and an integrated circuit.a quartz watch may be eigher an analog watch,which has a traditional dial and hands ,or a digital watch ,which displays the time in numbers in liquid crystal.when activated by the power of the battery ,the incorporated quartz vibrates extraordinarily rapidly,as it divides the passing of time into 32768 equal parts per second.this very high frequency,as it is called ,is the reason why a quarz watch will always be about 12 times more accurate than a simpler mechanical version.quartz crystals scarcely age are not affected by changes in atmospheric pressure or extreme shocks . A major source of Natural quartz crystals is Brazil .

Descriptions of case shapes ,measurements ,dials apertures ,numerals ,hands ,and so on ,will be found in the glossary of terms ,The vast Majority of wristwatches sold around the world are made of stainless steel. The most expensive watches are most often made of 14,18 or 22 carat yellow,pink or white gold,though the wristwatch buyers' and colectors' maker of today is naturally affected by the muslim decree that precious metals should not be worn ,they may also be made of platinum,vermeil(silver gilt),or titanium,In late 1988 Audemars Piguet Introduced the first tantalum watch(automatic,three subsidiary dials ,calendar,chronograph); tantalum is blue-gray in color(In the mass,so scratches do not matter); it is almost as hard as stee(although 200 times more expensive)while its desity is only 10per cent less than pure gold . The rarity of the basic raw material means that very few of these watches will be made; they will undoubtedly become collectors' pieces.

Elsewhere,it is explained why it is not wise to open up a wristwatch unless absolutely necessary.the best watches are made to be utterly secure from any intrusion. It is interesting here to not that the word' waterproof ‘ is not used; the correct expression is ‘ watch-resistant' ,water resistance is measured in atmospheres' ,and most water-resistant wristwatches are tested to three atmospheres-that is ,twice the normal atmospheric pressure.unless specifically made for swimming and diving(Tag-Heuer and Citizen ,For instance,have such special range),the average water-resistant watch is not intended to be immersed in water; hot water can distort the glass and washers.according to international standard specifications a watch may be called water resistan if it survies immersion under a meter(3.28 ft) for 90 seconds.

One easy way to learn the language of the wristwatch is by reading through auction catalogs ; the accurate and precise descriptions will help make you familiar with the terminology .

Thanks Jeff - I am bookmarking this post.  Some lenders tell buyers not to call any other lenders or they won't be able to get a mortgage because their credit score will drop so low.  I was told the window for these inquiries not affecting your credit score is 11 days - is this true?

This is so basic that I am still surprised (and more than a bit outraged) when a buyer client tells me that they don't have a good faith estimate after they have given applicaction to a mortgage lender.  Nice job Jeff. 

Jeff - This is advice buyers need to heed.  I agree with Lenn regarding the timing, yes a day can make a big difference.

Jeff,

I agree and tell my buyers to shop apples to apples.  But, JianMingLin, how random is that.

I kept waiting for the post to relate to your blog but didn't see that.

Enlighten please.

I hear ya...I've heard people tell me they never got one...weired...not educated and made the mistake of listening to the LO or MB...I'm surprised they couldn't press charges but I'm also sure those types of characters are out of the business anyway...maybe flipping pizzas now.

Jeff...Thanks for the post-hope some of my buyers read it. I tell them to get a GFE but a lot of mortgage brokers don't like to do that unless they know they're getting PAID!

Your number one item, only compare lender fees, lines 800-820, is key.  Most of those other numbers are out of their control and just estimates.  It's sad, but most people only look at the bottom line, the amount of cash they need to bring to closing.  They don't look into the details of how that number is being estimated.

Great points in your post. As a lender, I understand the furstration of "competing" GFE's.

Its all in the presentation. If you are able to walk the customer through your GFE, and explain the reasons for each fee, most customers will be able to see the flaws in the "other GFE".

Jeff, I reblogged this - thanks for the opportunity.  This is excellent and you are right - it is a MUST READ.

Every time I refinanced, I always had to ask for a Good Faith estimate.....sometimes it was like pulling teeth.

Jeff, I had an agent tell me the other day that the good faith estimate is none of her business.  They terminated on the grounds of not having enough money for the escrow.

Loved explaining to the seller that the other agent and the mortgage broker did not do their job. 

Jeff,

I think ypo were spammed by a watch maker.  Report them!  I was spammed in here by a motorcycle parts store???!

The other thing is that all the non-lender fees ARE estimates.  Title fees vary, there is an aggregate adjustment to consider and different lenders require different inspections.  Is the seller's survey acceptable?  Does the seller have a recent title policy? 

As you said, compare the rate and the origination and other lender fees only, to be fair.

Jeff, it doesn't matter how often you write about this, it isn't often enough.  Those of us who have been around the block a few times have enough war stories to already know what you're talking about, but real estate rookies need to take note - or, better yet, email this and your other posts to themselves and save them in a file of "things to tell my clients."  Great post!

Jeff - I'm with Margaret...  This is information that every buyer needs to know.  I had a mortgage broker tell me he doesn't "give" good faith estimates... I told the buyer to MOVE ON!  Thank you Jeff for sharing the TRUTH!

Great tips Jeff.  I am always shocked at times when I ask a buyer if they got a GFE they say no and then it takes awhile for the LO to get them one. 

I have had the same experience as above... mortgage guys not giving GFE's out...when I ask my buyers to their GFE and they do not have one, they become frustrated and fearful of the mortgage person  ----  Forgetting this important step does not help during this interesting economy.

FRED.... I agree, I think the TIL has and will add misleading hope to the borrower. But in regards to pricing changing 2 to 6 times in one day?  I think that is pushing it....  I think in my 16 yrs, it might have changed 4 times, maybe 5 times.... about 4 times ever. Just in the last 2 months, it has changed 3 times in 1 day once and 2 times maybe about 6 times. Prior to that in the last 16 years... maybe 2 to 3 times in that spam, maybe 100 times ever (in my 16 yrs, that it changed twice in 1 day-- and I am only talking about the negative changes, not the positive changes... seriously, why would I worry about those changes.   ;o))?  I am just throwing numbers out there and I get your point, but let's not put it out there making it sound like this is the norm. Just my .02 and thanks for the polite comment.

BETH.....    as mentioned before, the loan officer that doesn't explain this is doing it for two reasons. They don't want they to probably focus on the lender's fees.... and they just don't want to educate the borrower, so they know how to shop.  thanks

PATRICK......  exactly, some don't give the GFE right away, even after you ask 2 to 3 times. That should be a major Red Flag right there.....  and thanks for the compliment.

JEFF D. ......  I would write about this once a week, but I don't want my blog site to be boring. But yes, the consumer doesn't know. I even have some question me in the mortgage application process, asking what their payment and such is. I am like... I gave you your good faith estimate. So at times, the borrower is to blame for this, for not listening.  Boy, do I have stories...

DORIS.....  In regards to realtors knowing all the fees... yes and no..  Realtors need to remember that the good faith estimate could reflect a poor credit score. There are hits for pricing on several issues. We aren't talking about the basic rates of years in the past. I just think a realtor should ask the borrower if they received one and to glance over it, but not to be critical of it, unless they see a large number as a broker fee on there. Other then that, they should be careful on how the advise their client.  Just my .02 .. thanks

CHRISTOPHER & STEPHANIE....... the pulling teeth issue really ticks me off. As noted above, once the loan officer qualifies you, the good faith estimate could be generated within minutes. This is the part that the consumer needs to understand.

In regards to this statement that you made... "Sometimes, being a buyers agent, the mortgage professional has indicated they cannot send the GFE to me...usually another red flag."

I semi disagreewith that being a Red Flag.  Why?  Because that is the clients information. It's actually private unless the borrower gives me the right to give the realtor a copy.  Again, I have no problem with the realtor getting a copy, but from their client. I am not trying to make trouble, but at the same time, I have nothing to hide. Hence why they can just get a copy from the borrower. And I will explain this to the realtor just as I have stated it here. The last thing I need is for the borrower to come back to me and get mad if I showed anything to the realtor. keep in mind, some of these things can be a fine line. 

In regards to getting a copy last minute, where it might be to late for the borrower to switch. Have them report the lender. By RESPA laws, the borrower must obtain a good faith estimate 3 days after making application. A GFE should always be given at application and usually is.  But they don't make a copy for the borrower or tell the borrower to make a copy. So let's not blame this all on the loan officer. But not educating the client is the big key here.... thanks and thanks for that polite compliment.

KATRINA...... lol....  what's sad is that I bet I could find a handful of monkies that could actually quote rates. At least in sign language or by holding up que cards.... lol

Thanks, Jeff. Good advice for the consumer. Keep up the great work!

Paul

Jeff,

This is great information for the consumer!  It's a shame when so many tend to be dishonest in this day and age. 

Jeff, agreee with the 24 hour rul, but unless you happen to catch me as I am on the road for the night.... there is no reason why a loan officer can not have GFE's out in the SAME day as requested

Jeff, thanks for this information, the more knowledge of how the mortgage industry works, the better we can serve our clients.

Jeff,  This is well deserving of a feature! As a Realtor, I always review my clients GFE with them and ask them if they had any questions they felt their lender did not cover of they just didn't think to ask at the time. If they say yes we callthe lender and walk through it together in a conference call.  I have a friend who called all the major lenders in our area last week to get a GFE and only one responded withing 24 hours, another had it to her in 48 hrs., 1/2 never returned her call and the others said that she'd have to submit to a formal loan application and credit check prior to releasing the GFE.  Wow! What are people thinking?

Jeff - This is another example of 'if I only had a penny every time this came up'.  I know there is not a class for homeowners on how to shop for a mortgage but there should be a requirement (similar to Reverse Mortgages) where you have to be counseled first.  Too many times a home buyer is looking at the bottom line which includes Lenders Fees, Title Fees, and Pre-paids.  The problem is that many LOs realize that and leave off some information thus causing confusion to the customer.  They think the fees are less and move forward with that LO.  When its time to close, they see 'insurance, tax,  and TRUE title costs'.  But by then its almost too late or the homeowner could lose the purchase deal.  Homeowners should be required to attend a 'what to look for' class first.  I assume you are like me where you have actually lost business because you had to be the bearer of bad news.  I have gained business also, but it bothers me when someone messes up a possible sale for me because they misled the home buyer.

Jeff - As always, this is a terrific explanation of the importance of having a GFE in hand.  Your examples made it crystal clear.  Last year, we had a lender who tried to jack up the fees at the closing for one of our clients, but we were able to get them removed.  It seemed ridiculous that we even had to discuss it.

Great Consumer advise, hard to believe people don't get GFE's. I see consumers don't always know what they info should get. I haven' tried the reblog thing yet, think I'll start here.

I want to know exactly when people are approved. I have had them turned down the day before closing after an approval letter was sent weeks before. Closing are always controlled by the lenders but the agents get blamed when there is a delay.

Hi Jeff, Thanks for an informative post.  Good faith estimates are essential, but are so often forgotten - it's sometimes like pulling teeth to get one.  And I believe that in today's market property taxes and homeowners insurance are two of the most underestimated items on the estimate.  These 2 numbers can determine whether or not a buyer can afford the home! 

SEAN......  this should be the most important topic related to mortgages, in my opinion. We need many to educate the masses... anyone, to include the consumer, the realtor, and the loan officer.. because I have come across many loan officer's that sell rate, but never give a GFE.

SAMANTHA...... . my pleasure and thanks for stopping by.

FRAN....... . what we need to do is have everyone and anyone to complain. May it be the borrower or the realtor, but we need both. We need to complain to the loan officer's manager... (if that lender is big, to the regional manager or to corporate), and we need to complain to the state, to the mortgage bankers association, and to the better business bureau. We strongly need to push this and not just sit back and cry in out pudding...

MARIA....... . thanks for the compliment. Yes, the consumer needs to know that shopping for a week does nothing at all. I have written about this also....

SPENCER...... . a pamphlet or brochure would be a great thing.  thanks for the polite compliment.

LYNN....... . this is a big problem also. Yes, there is a time frame of 14 days... and there is something that talks about this for 30 days. But that shouldn't be the case. If I have a borrower that doesn't want me to pull their credit because someone else pulled it, then I will ask them to send it to me. Now, by law, the consumer is not allowed to get a copy of it. But you know what, most people don't follow that. So, they should be able to send me a copy. If nobody has pulled their credit, then I won't give a GFE... I either need to pull it or someone else does. I won't give a blind GFE.

KRIS...... . that comment ticks me off even more than you, because it hurts my business. Can you blame the borrower? But that loan officer damn well knows that they aren't sharing the GFE because they don't want to get shopped.... I fired a client this past summer after they hadn't received a GFE from another lender for 4 business days. But she would still call me and ask me questions, because she trusted me. What's sad is that she sad the loan officer must have been busy... lol  And it wasn't just one, but two different loan officers that she was speaking to... I said, BYE BYE....

I have several of these stories myself. One is particularly good. I'll blog about it one day. The FIRST thing I tell my clients to get is a copy of their GFE. IF a loan officer doesn't want to give that...BIG RED FLAG!! GBU!

Thanks for the info. I'm new to real estate and am eagerly trying to learn all I can. This is the kinda stuff I need to know to properly advise my buyers. Thanks again and please, keep these blogs with such valuable information coming!!

Thanks, everyone, for sharing your experience and knowledge.  I agree.  This post would make a great pamphlet for prospective buyers.  Your war stories make me very appreciative of the good, honest mortgage brokers out there.  As tough as it's been on realtors, I think it has to be even more challenging on the mortgage side.  Talk about a roller coaster ride every day of the week!

Linda Schulte, Keller Williams North Atlanta

A very good real. I would like to share this with my customers. May I Re-Blog with proper credits?

Great information!  I'm going through a refi myself and waited over two weeks for GFE and approval  because underwriting was "backed up"  I wish I would have read your information sooner!  I would have insisted!

Valuable information Jeff.  Thanks!

Jeff,

  If the APR includes fees paid by the borrower into the equation, then why does the APR change from the rate if the seller pays all those fees?

Great information! thanks

Renee

Jeff, I am always surprised when a lender doesn't give a GFE to potential customers. Unfortunately most don't know to ask for one, so they are in the dark until we ask them to fax it to us. Thanks for posting the importance of this.

Jeff - This is an excellent post.  A lot of important information very clearly stated.  I particularly find the part about getting all of the estimates on the same day very important. 

Jeff- I couldn't agree with you more!  I got into this business at a very tumultuous time, and have quickly learned how to stand out from the competition.  Educating your borrowers is of the utmost importance (I think back to my first home purchase and wish I would have been more informed).  The company I work with has gone one step further and created materials we give to each client to educate them more on the entire mortgage process. 

I agree with you as well, Jeff, about providing the Real Estate Agent with a copy of the GFE.  This is a fine line to walk, and I ask the borrowers to provide their agent with a copy if they wish to.  People, especially now, are very particular about who knows what when it comes to their money.

-Wil Nordbruch

JENNIFER......  if any advise that buyers should get, this should be #1 and not just because I wrote about it.  And yes, a day can make a difference, especially in the last 30 days.

BRENDA...... apples to apples is so key. And as I mentioned, it should not be the overall bottom number, but the lenders fees and the rate and that's it... in regards to that other comment, I deleted it. thanks

NEAL...... I hear from consumers often that they never received one. But between you, me, and the fence post... if the borrower signed an application, they signed a GFE.  Did they get a copy?  Probably not. But... the borrower could have made a copy of the GFE themselves. If the borrower meets the loan officer in their office, ask them to make a copy. It the application is sent out to the borrower, make a copy before sending back.  It's a RESPA law, that the lender needs to make sure that the borrower has a GFE 3 days after the application date, no later than.

On another note, there are many consumers that shop with a loan officer, who never give then a GFE. Now, there is no law in that. But I use it to my advantage, when speaking to a consumer that was never given a GFE and it's been 3 days or longer. I tell the borrower that the loan officer has something to hide. You need to see your down payment, your mortgage payment, and all costs. It's sad and scary, but I use it to my advantage.  thanks

LISA S. ...... that comment is BS... I don't get paid on a loan unless I close that loan. In order to get to that point, I need to provide good service upfront and a reasonable GFE with costs...  those loan officers will be out of business as business slows down. But we need to educate the average consumer and keep writing about this.

TIM.....  bingo, hence why I wrote about this again. I try to write this same type of blog about every 4 months. I think I will write about it once a month now. It might be boring to some, but we need to educate the consumer. Hence again, why I wrote this. I had a prospective client who has shopped with 2 other lenders, get a GFE from a major lender. This loan officer used property taxes of $150 per month less than what I used. And what I used was very accurate. I asked the borrower in regards to what properties they were interested in and what those taxes where. Another sad thing about that?  I am out of state and that loan officer is in the buyers same state. Not to sound full of myself, but I think I have the deal. The borrower called me again last night at 7:58 pm to ask a few questions. I can sense she is happy with me.

RON......  in all honesty, as I mentioned to Neal in my comment above you, I love comparing the GFE, if the borrower listens to me. Many do... I have had a few give the other loan officer the benefit of the doubt, even without receiving anything for 4 days, saying that they must be busy... LOL   Sorry, even if I am swamped, there is no excuse, if you qualified the borrower. Very sad, but again, I use it to my benefit.  Read my comment to Tim, right above you. In that case, the other loan officer was $150 per month short on their property taxes... OUCH... but I pointed this out and that borrower will not be using the other loan officers services. And thanks for the polite compliment.

KAREN......   my pleasure and thanks for the kind words... and for reblogging this. This is one issue that we need to get out into the masses. The other issue, that there is still mortgage money to lend.

DIANE....... then you have always been using the wrong loan officers. Not for nothing, next time, I would be glad to help... or at least offer you what I could do for you or your clients. I am licensed in SC.  thanks

Thanks for the blog.  Any agent that does not get a good faith estimate from the different lenders is just a liable as the lender.  There is almost no way to compare lender estimates without a good faith estimate as it is the easiest business to scam people.  If you are an agent and are involved with the lack of producing a good faith estimate.....you are asking to get sued.  So the lender will get sued and fined, but agents, cover you tails and do your fiduciary responsibility.

Thank you so much for this information. Several years ago, before I became a Realtor, I was refinancing my home loan and didn't see a GFE until I was signing the closing documents in front of a notary. The lender's fees were outrageous so I cancelled the loan within the 3 day period. I reported the lender to RESPA and complained to the lender directly but never heard back from either. I will never do business via L.T. again (found on the Internet) and I always advise my clients to choose their lender carefully, as you suggest.

Wow, great post Jeff!

and it so hits home! Just today I did a GFE for a customer that will be using another lender but called me to make sure they were being treated fairly. I gave him my GFE just for informational purposes, which I feel any lender should be willing to do.

Also, thanks for highlighting where other lenders under-disclose estimates. I'm sure I lose so much business because I refuse to under-disclose taxes and insurance. Our customers need to realize lenders have no control over most of the items quoted in a GFE, so a higher cost GFE can often just be the sign of a responsible lender!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Great tips for my clients. Thank you.

Jeff,

GFE can be very confusing to an untrained eye but as long as the borrower focuses on the 800 lines he'll get a solid idea what a mortgage lender is charging. That's where it's at.

This ever gets old to post. Thanks for the reminder.

Excellent!  Thank you for reminding home buyers the importance of being able to trust your loan officer! - Karen Cox, Landmark Mortgage, Salem, OR.

Jeff, Good post and very to the point. Thank you.

Jeff, thanks for the post.  Its always good to read other people's experiences when it comes to loans.

an oldie but a goodie

I represent Buyers at closings all the time who either were not given a GFE or did not know they were given a GFE.