New GFE requirements may also help real estate agents and brokers

02/08/2010
New requirements regarding the Good Faith Estimate (GFE) should help many consumers and the rules may also be viewed positively by real estate professionals, according to a recent report from National Public Radio (NPR).

As a result of the new rules, lenders now have to use a standard GFE form. The purpose of the standard form is to have quoted costs for things like title insurance and other closing costs be comparable from lender to lender and as close as possible to what potential homeowners will actually end up paying at closing. As a result, consumers should run into fewer surprises when it comes time to put their money on the barrel for a new home. But the new regulations could also help out real estate agents who are trying to help their clients purchase a home.

Take, for example, Lisa Satterfield, who was featured in the report by NPR. A Realtor in Charlotte, North Carolina, Satterfield produced more than $7 million of business last year despite the difficult economy. She said that even changes in things like origination fees could make what was an easy deal more complicated.

"Something has changed with either their out-of-pocket expenses or their rate," Satterfield told NPR. "And at that point, their feet are kind of tied."

Bill McConnell, a mortgage lender who also works in Charlotte, said that many homeowners would end up just paying the higher costs because they were already packed up and ready to move.

"At that point, they're really over a barrel," McConnell told NPR. "There's not a whole lot they could do other than pay the higher amount."

McConnell said that the rules should help "raise the bar" for those who work with mortgages and should help get rid of brokers who try to mislead people looking to buy a new home.

However, some lenders may still try and get the most they can from consumers. For example, recent stories have noted that some lenders may provide their own worksheets while working with consumers. Unlike the GFE papers, these worksheets aren't legally binding.

As a result, consumers should make sure they are receiving the actual GFE and not some other lender specific worksheets. When dealing with lenders, potential homeowners should make sure they ask for the required GFE forms if they aren't provided.