New Good Faith Estimate and HUD-1 Regulations Start January 1st!

Beginning with new loan applications taken January 1st, there will be a new Good Faith Estimate form that all mortgage lenders will now be required to use. And it’s not just a new form that’s being released…but a whole new set of regulations that accompany this new form.

The Government will now regulate when a Good Faith Estimate can be provided to a consumer. A lender must have ALL of the following 6 pieces of information before issuing a Good Faith Estimate: borrower’s name, income, social security number, estimated property value, loan amount, & property address. In addition, some of the closing cost estimates provided on the GFE are now binding figures…meaning they cannot change by more than 10% from the original quote.

Since the information contained in the new GFE is drastically different from what consumers are used to seeing, the new form will take on a different role than it has traditionally served. Per the new law, the GFE no longer provides the consumer with their total monthly payment or total cash to close; rather it is intended to be more of an accurate & binding disclosure of closing costs.

At LoanCentral, we have created new worksheets to ensure the consumer is aware of their total monthly payment and total cash to close. This is important information borrowers need at their fingertips to assist them in making financial and buying decisions regarding their new home purchase.

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com