Mortgage Client: "I'm confused. I don't understand. None of this makes sense. This paper does not even give me the numbers I need to know."
Loan Officer: "Why, Mr. and Mrs. Mortgage Client, you are absolutely correct...all this confusion compliments of our wonderful government and their ivory tower."
Could government just leave well enough alone? Yes, the MN Mortgage Mom is on a rant!
As of January 1, 2010, the newly overhauled Good Faith Estimate (GFE) and HUD-1 Settlement statement went into effect. And boy, what a confusing mess it is!
Last week, I met with a new client who has bought and sold real estate several times. This client is very well informed and experienced. As we were going through the mortgage documents, we came upon the new GFE. I began going through it when my client said, "Excuse my profanity, but what is this s**t?" I explained to him the changes, compliments of our wonderful government and their ivory tower. He expressed, "This is a joke. Is there any way I can get the old document?"
First, who other than the government can take a 1 page, detailed document of all fees and turn it into a 3 page bundled up mess??
To make matters worse, it does nothing to help the mortgage consumer understand some fundamental and critical numbers:
Cash-to-Close--There is no indication whatsoever on the new GFE as to how much money will be required from the borrower to bring to closing. Huh?
Total Monthly Payment--Ummm, yes, most borrowers want to know what their total payment is. Gotta look for it on another mortgage document!
Seller Paid Closing Costs--For those who are purchasing a home, it is nice to see how seller paid closing costs paid on behalf of the borrower/buyer will affect their bottom line cash needed at closing. You guessed it! Not on the GFE anymore! Gotta look for it on another mortgage document again.
Details--Many of my clients are very detail oriented. They want to know exactly what they are spending their money on. Rightfully so! The new GFE takes all of that away. Now fees are BUNDLED. Great for the lender, not so great for the consumer.
Here's my point. I am not ranting because this has just made my job more difficult. It has, but I will get used to it very quickly. I am used to constant change, being in the industry as long as I have. However, my point is these new forms do nothing to provide clarity to the consumer in a concise, easily documented fashion. Sure, these numbers can be found elsewhere in other mortgage documents, but GEEZ! At the consumer's expense in the growing sea of mortgage confusion?
All of this, compliments of our wonderful government and their ivory tower.
