Growing Pains With New GFE

It's been a little over a month since the new GFE was introduced. I have had the pleasure to present it to several clients and am seeing a lot of bewildered looks. I am doing my best to put this confusing document into plain English, but seriously- HUD really messed up on this one. It wouldn't surprise me if we see another revision of this document in the next year or so.

I see the point for the new GFE- greater disclosure, more transparency, less "hidden fees" and so on. The hope is that dishonest loan officers will no longer be able to change fees during the loan process. Everyone has heard of someone who was shocked at their signing because the fees were much higher than originally quoted. This has been a big problem in the past with shady LO's looking to bilk the unsuspecting.

One of the big problems with the new form is that the fees are not itemized. Sure, you can look at it as being simpler to see consolidated fees, but don't you want to know where the money is going?

Also, on the new form there is no place to put the "Cash to Close" or the "Total Monthly Payment." I've been in the business for a while, and those are the two things that most people care about. The reason for this change is that HUD no longer wants us to quote insurance or property taxes. They only want us to quote things that are directly related to the mortgage- regardless if you are impounding the taxes and insurance or not. Instead of "PITI" (principal, interest, taxes and insurance) we now have "PIMI" (principal, interest and mortgage insurance).

My answer to the two problems that I've listed is adding two forms to my initial meeting- a loan summary and an itemization of fees sheet.

I'm sure that things are going to get smoother and smoother as we all adjust to the changes and more rules are clarified.