Daily Mortgage Interest Rate Updates, Trends & Projections: 2010 Good Faith Estimate: What it all means

2010 Good Faith Estimate: What it all means

While basic understanding of the "book smarts" within the mortgage industry will help you understand specific terminology, loan programs, and features, there is so much more you will need to know in order to make an informed financial decision.

My approach to providing education strives to further your understanding beyond the "book smarts" of the mortgage industry, and learn the valuable "street smarts" that will help you achieve the best possible results, while avoiding the most common pitfalls that non-informed Borrowers and Real Estate Professionals have experienced.

The Mortgage Street Smarts of the 2010 Good Faith Estimate (GFE):

2010 GFE Notes

Whether you are a Real Estate Agent or Mortgage Originator, it is imperative that you familiarize yourself with the 2010 version of the Good Faith Estimate of closing costs (GFE).  Many changes have been made (and not all of them are good)...but they all affect our business.

Good Faith Estimate  

Old GFE versus New GFE

  • What it was (oldGFE)
    • Itemization of Closing Costs as an Estimate
    • Summary of Transaction (including PITI, Seller/Lender Credits)
    • Adaptable, able to change or updated as needed
  • What it is (newGFE)
    • A one-way binding contract
      • Borrowers have 10 days to respond with an intent to proceed, or GFE is voidable
    • A tool to compare loans and ONLY loans to encourage the ability of a Borrower to shop
      • No longer a tool to see Seller/Lender Credits, Condominium Fees, Cash to Close
      • No longer shows PITI payment
      • No longer has a place for Borrower to sign (does not need to be signed)
      • No longer an Estimate (it is now a Guaranteed Fee Explanation)
    • A "sister form" to the new HUD-1 / HUD-1A
      • HUD-1A is a refinance form (only 2 pages instead of 3)

Realtors, are you curious why your Mortgage Originator does not want to give your prospective Buyers a GFE until after they have an open escrow?  Here is why:

  • If conducting a purchase pre-approval (Property Address TBD), a Mortgage Originator does NOT have to provide a GFE
  • If the Mortgage Originator does provide a GFE, the Mortgage Originator may not make changes to the Income, Origination Charge, or Third Party Fees when the Property Address is received

Breakdown of 2010 GFE

Page 1: Summary Page

  • Important Dates Section:
    • The "interest rate" and "other settlement charges" dates are NOW independent of one another (A + B on Page 2)
      • An originator is not guaranteeing the interest rate, but they are guaranteeing the other settlement charges that are quoted
    • At lock, an updated GFE must be issued with "Important Dates" sections updated

Page 2: Fee Details

  • Section A: Most controversial section is the Origination Fee (once disclosed "Box A" cannot increase.  It may stay the same or decrease). This measure was implemented to prevent "bait & switch" tactics being performed by "ethically challenged" Lenders.
    • 1. Our Origination Charge (this charge is for getting the loan for you): Summary of all the income that is being produced on the loan (compensation to the Broker and/or any Administrative/Lender Fees such as Application Fees, Processing Fees, and any Origination Charges a.k.a. Points).
      • Fees that are NOT listed in this section include: Credit Report, Appraisal, Tax Service, Flood Cert (they all go in Section 3)
    • 2. Your credit or charge (points) for the specific interest rate chosen:
      • The credit or charge for the interest rate of ____% is included in "Our Origination Charge." (see item 1 above)
        • This box is checked when giving a PAR interest rate: interest rate is filled in, and charges section (at right side) is left blank (due to the fact that all Origination Charges are summarized in Box 1 above)
      • You receive a credit of $_______ for this interest rate of _____%. This credit REDUCES your settlement charges
        • This box is used when providing a credit back to the Borrower (whether from Banker or Broker)...any dollar amount listed in this box will appear as a negative dollar amount (i.e. -$3,000.00)
        • YSP (Broker) all YSP generated must be put in the $____ box to the right
        • SRP (Banker): some, or all can be put in this box if a credit is being provided (leave blank if NOT crediting any SRP to Borrower)
      • You pay a charge of $_______ for this interest rate of _____%.  This charge (points) INCREASES your total settlement charges
        • Originator is providing an interest rate that the Borrower has to pay extra money to obtain...any dollar amount listed in this box will appear as a positive dollar amount (i.e. $3,000.00)
        • No YSP/SRP is being provided from this rate
        • Banker: use when Borrower is paying Discount Points
    • A. Your Adjusted Origination Charges
      • To obtain this figure, simply add/subtract blocks 1 & 2 above
      • This number expresses the net amount that the Borrower is expected to "bring to the table" for this section (Borrower's portion of the Origination fees that they are responsible for covering).  This money would either be brought to closing (purchase loan) or withheld from loan proceeds (on a refinance where closing costs are financed into the loan)
  • Section B: Third Party Fees (NOTE: Top section of Page 3 of GFE titled Understanding which charges can change at settlement thoroughly detail the allowed changes)

**Sections 3-7 fees are held in a 10% aggregate tolerance...if these quoted fees are more than 10% higher in actuality, it is the Originator's responsibility to cover the difference!

  • 3. Required services that we select
  • 4. Title services and lenders title insurance
  • 5. Owners title insurance
  • 6. Required services that you can shop for
  • 7. Government recording charges

**Section 8 fees cannot change

  • 8. Transfer Taxes: These charges are for state and local fees on mortgages and home sales (these fees CANNOT change)

**Sections 9-11 fees can (and will) change

  • 9. Initial deposit for your escrow account
  • 10. Daily Interest charges
  • 11. Homeowners Insurance

Page 3: Instruction Page, Comparison Table, Shopping Cart

This page solely exists to encourage the Consumer to "shop around" and "compare" different options. Any seasoned Mortgage Originator can assist their Borrower(s) in assessing the pros & cons of different loan programs (i.e. 30 year fixed, 15 year fixed, etc) and different pricing structures (i.e. 4.75% w/ 0 points versus 4.50% w/ 1 point, etc.).

For more information on topics like this, please feel free to visit www.MortgageStreetSmarts.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals)

To see if you qualify (and to obtain a current market interest rate quote), click here for a secure online loan application form.

For more information on topics like this, please feel free to visit www.GordonMortgage.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals). Educational content provided by:

 

Jason E. Gordon

Branch Manager | Sr. Mortgage Loan Officer

CMPS, CDLP, RCS-D, CDPE, CMHS, CMC, NMLS 259027

 

Gordon Mortgage Group - AmeriFirst Financial Inc.

 

Office: 619-200-8031

Email: jgordon@amerifirst.us

www.GordonMortgage.com

 

11260 El Camino Real, Ste. 100, San Diego, CA 92130

 

What People Are Saying About Jason Gordon

 Not all Mortgage Lenders are alike! Find out what Clients, Real Estate Agents and other Financial & Legal Professionals have to say about Jason Gordon.

 

 

Attention Real Estate Agents!

 Ever heard of a Lender having more "skin in the game" during escrow than a Buyer? Ever wish a Lender would put their money where their mouth is? Learn how the Protect Your Transaction (PYT) program will improve the negotiation leverage for a Buyer, as well as how PYT benefits the Seller & Realtors in this short video.

 

 

Successful Realtors embrace technology to help market properties and themselves. This video summarizes a few of the tools the team at GORDON MORTGAGE GROUP (powered by AmeriFirst Financial Inc.) provide their Realtor Partners on a daily basis. Contact us today to learn more!

 

 

Recommended Links:

 

To see if you qualify (and to obtain a current market interest rate quote), click here for a secure online loan application form.

 

Gordon Mortgage Group - AmeriFirst Financial

 

Licensed by the Department of Corporations under the California Residential Mortgage Lending Act.

AmeriFirst Financial Inc., 1550 E. McKellips Road, Suite 117, Mesa, AZ 85203 (NMLS #145368) Toll free phone (877) 276-1974. Copyright 2012. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all loan amounts. Other restrictions and limitations may apply. AmeriFirst Financial is required to disclose the following licensing information. Please click here for licensing information. 

 

CLICK HERE TO READ CLIENT & REALTOR TESTIMONIALS

 

Gordon Mortgage Group Credentials 

Jason Gordon Mortgage 
Comment balloon 2 commentsJason E. Gordon • October 07 2010 09:38PM

Comments

wow, just a little more complicated huh?

Posted by Henry Pailles, San Diego Real Estate, San Diego Realtor, Chula Vista Real Estate (Chula Vista Realtor,Short sale,Eastlake Real estate,Realtor) about 8 years ago

One of many changes we've all had to endure over the past few years (just like MDIA, HVCC, etc.). Never a dull moment!

Posted by Jason E. Gordon, Sr. Loan Officer, CMPS, CDLP, RCS-D, CDPE, CMHS (AmeriFirst Financial Inc, San Diego, CA) about 8 years ago

Participate