The Ready Way

New disclosure laws. I hope you like to sign papers

Author: Administrator

As of January 10th we have new disclosure laws.  Basically, the good faith estimate is supposed to be accurate and if any fees increase the good faith has to be presented to the borrower again so they can agree or disagree.

In the past good faith estimates were a bit of a joke.  I constantly would come up against good faith estimates that were completely BS.  The old trick lenders would use is quote low up front and high at the end.  This is supposed to halt that practice.

We started the new process January 1st, early, because that is the way we roll.  As with any new requirement it has issues.  Here are two I discovered today.

1) By law we have to disclose within 3 days of taking the application.  If your rate is not locked at the time we disclose we will have to re-disclose the good faith estimate and potentially the truth in lending as soon as we lock the rate.  What this means: is more paperwork, forms to sign and changing $ amounts.

2) We need to have accurate title fees when we disclose.  Title will not have accurate fees until they get the prelim which takes 3-5 days.  We have to disclose within 3 days, we cannot wait for title. Which means we have to ask title to give us their best guess.  If their fees are higher once they get the prelim we get to re-disclose. What this means: is more paperwork, forms to sign and changing $ amounts.

After really looking at how this works it may protect a few borrowers from high fees but will not protect them from rate crime.  Unless it was  required for the rate to be locked for the loan process to begin there is always the risk of being quoted low upfront and high once you are half way through.  Rates change every day as per the market.  Your rate is only as good as your loan consultant is ethical.

The best thing any consumer can do is interview the loan consultants upfront.  Ask for recommendations, how they feel about money etc… 

All lenders are not the same and you need someone you can trust.

This entry was posted on Tuesday, January 5th, 2010 at 9:20 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.