New Good Faith Estimate coming January 2010

With all the talk of the new good faith estimate coming in January, I have found there is quite a bit of confusion over the new format. If you're a lender who has been disclosing correctly from the beginning, I don't believe the new format will be challenging. The change is a significant one to be sure, but as an originator one should know how the changes will impact you and your clients.

While working on a few scenarios with a couple of colleagues, a few questions came to mind. To begin with there is no place for any tax prorates, homeowner's association dues or fees, total cash to close, or complete monthly payment. A summary sheet will help with some of these items, but what this really means is that we'll all need to spend more time educating our clients on all aspects of the process. I alreadyenjoy spending time up front with clients to assess their mortgage needs, but with the new estimate it will be even more crucial to explain the process to clients. Even those who are mortgage veterans, they will need clarification regarding the new paperwork. We're all so used to seeing the tried and true Good Faith Estimate when discussing loan options, many clients and referral partners will need to get used to the new forms. We are essentially going from 1 page to a total of 4 pages. To clarify, I do believe the new forms are difficult to understand and I am trying to figure out how anyone could find the new forms easier to understand. However, I don't believe it will be a huge detriment to our industry.

The new estimate, along with changes in licensing requirements will force changes, some badly needed, in our industry. I do believe we'll see a new level of professionalism as the barriers to entry continue to climb. And for those reasons, I'm grateful for the changes. I'm looking forward to 2010 even with all the changes that lie ahead.