New RESPA Guidelines and Good Faith Estimate – Good or Bad?

New RESPA (Real Estate Settlement Procedures Act) guidelines have come out and they will change the way Good Faith Estimates look beginning January 1, 2010. The changes will also increase the level of accountability that goes along with the lending process – for both lenders and borrowers. Some are “hootin n hollerin” about the changes while others are happy about them. Here are two people’s reactions to the changes…

“Hootin n hollerin” about the changes…

On the training conference call on Wednesday were originators from across the country who worked for direct lenders, brokers and banks. The common sentiment was that the consumer will in reality end up paying higher costs for loans as originators will not want to risk under-disclosing costs and fees, not just their own but those of escrow companies, title companies, appraisers, surveyors, etc, and be stuck with the tab.

- Excerpt from an article in The Orange County Register by Marilyn Kalfus

Happy about the new Good Faith Estimate and RESPA guidelines…

It completely evens the playing field on both sides of the table.  It also comes with like a definition page that outlines what is encouraged to shop around for and what is not negotiable.  No more “nickel and diming” over every line on the GFE.

The best part is that the definition of “application” has SSN as a REQUIRED field.

There are LOTS of skeptical people out there (rightfully so) that do not like to provide a SSN, but ask us to provide a “ball park” GFE based on the information provided.  RESPA no longer allows a GFE to be offered without a SSN.  This allows lenders to provide a responsible and more accurate GFE and prevents prospects from calling 10 banks asking for GFE’s just to see what their fee’s are.

Ooooh, just lots of good stuff – once again, for both borrowers and lenders…

Honesty, reliability and accountability is what the new GFE provides.

It puts the Good back in Good Faith Estimate!

- Christopher Koegler, Operations Manager – American Funding, Mclean, VA

I think that the new RESPA guidelines and Good Faith Estimate are good in theory, but theory and reality are two different things. We’ll have to wait and see just how they actually effect borrowers and the real estate industry as a whole.

What do you think?

P.S. Here is the new Good Faith Estimate (if you don’t see the embedded document below, click here)…

New Good Faith Estimate beginning January 1, 2010 –