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How are those new 'good faith estimates' working out?

January 17, 2010 | 11:50 am

Reforms to give home buyers a more accurate picture of lending and closing fees have been in effect since the beginning of the year and lenders are already finding loopholes. From the Nation's Housing on latimes.com:

Many loan officers and lending institutions are sidestepping the new, price-bound [good faith estimate] by giving shoppers "work sheets" and "loan scenario" forms that come with no legal requirements for accuracy, and were not even contemplated under the reforms.

In effect they are substitutes for the new GFEs but, in the wrong hands, they are open to lowballing and bait-and-switch games.

The work sheets purport to contain much of the information provided by a GFE. Typically they are issued only when shoppers do not provide -- or are asked not to provide -- key information that constitutes an "application" under HUD's definition in the rules.

For example, if a consumer does not provide the address of the property to be financed, there is no application and therefore no requirement to issue a tolerance-bound GFE.

So make sure you are getting the real deal. The new GFE requires lender-related fees to be the same at the time you applied to when you close and allows only a 10% increase on title insurance and closing fees. Leave us a comment if you've been given a work sheet or other nonofficial form.

-- Lauren Beale

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