Mortgage shopping will soon be a lot less complicated.
RESPA Reform takes effect on January 1, 2010. While still not perfect, the changes do simplify the ability to compare loan offerings between lenders. The goal was to simplify and improve disclosure requirements for mortgage settlement costs under RESPA. My analysis: Mission Accomplished
Here are some key highlights for borrowers:
- The new Good Faith Estimate (GFE) and the New Settlement Statement (HUD1 or HUD1A) now correspond to one another. In the past, there was no direct correllation between line items, making it difficult for a consumer to know whether or not undisclosed junk fees were being charged at closing.
- Instead of breaking loan costs down into multiple line items, now, all costs being charged by the lender will be compiled into one total fee.
- Additional information about the loan (Is there a pre-payment penalty? Can this loan Adjust? etc.) is required to be disclosed on the Good Faith Estimate, creating more transparency about the loan.
- Lenders will be required to deliver on the Good Faith Estimate as quoted (NOTE: some items have allowable tolerances for change).
Here are some more changes and an overview of the new forms.
You will be better able to understand an compare loan proposals from different lenders if you have an agent who understands the process. Your best bet is to hire an Exclusive Buyers Agent who will work only on your side of the transaction. Overall the reforms will make it easier for the average borrower to comparison shop for a mortgage loan.
As advocates for the Home BUYER, one of the services we offer our clients is to help them evaluate lenders and loan options using our TOTAL Cost of the LoanSM system.
If you have excellent credit and will be buying a $300,000-$800,000 home within 90 days and would like an agent who will work exclusively for you, make sure you get an Agent on YOUR side of the transaction! Make sure you hire an E B A!
Call us at (801) 969-8989 or contact us via the link on this page.
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Finally...
Benjamin, good post on this topic. I cant wait for the changes and it will make it a lot easier for everyone.
I think it's a good step in the right direction; however what will it look like if lenders can bundle fees?
benjamin benjamin is that YOU? I almost didn't recognized you - I thought who is THIS GUY on my subscribed list! And guess what? It was you! :-)