Good Faith Estimate Replaced

Good Faith Estimate Replaced With Loan Estimate By CFPB

ByAlex Carlcucci

This BLOG On Good Faith Estimate Replaced With Loan Estimate By CFPB Was PUBLISHED On August 10th, 2018

Which means a good faith estimate replaced by a CFPB estimate of the loan
The Good Faith Estimate Replaced Effective October 3rd, 2015

Back in 2010, the United States Department of Housing and Urban Development, HUD, has created and launched the uniform Good Faith Estimate, also known and referred to as the 2010 GFE.

  • The uniform Good Faith Estimate had a lot of flaws in it and was very difficult to understand
  • Despite the flaws with the 2010 Good Faith Estimate, HUD was extremely proud of the 2010 GFE they have created and launched into use
  • HUD’s creation of the Good Faith Estimate was to promote consumers to shop for lenders
  • However, the Good Faith Estimate was extremely flawed due to the fact to lenders could not issue the Good Faith Estimate without having a physical address for home shoppers
  • The GFE could not be issued with having a To Be Determined address for home shoppers
  • There wasn’t any tolerance for lenders to re-issuing the Good Faith Estimate to add a property address
  • Mortgage industry professionals and consumers had complaints about the Good Faith Estimate since its inception
  • This was because it hasn’t provided any clarification to home shoppers who are undergoing through the mortgage application and approval process

In this article, we will discuss and cover Good Faith Estimate Replaced With Loan Estimate By CFPB.

Good-Faith-Estimate-Replaced-With-Loan-Estimate-By-CFPB

 

The Last Day Of The Good Faith Estimate Replaced: October 2nd, 2015

The Good Faith Estimated Replaced effective October 3rd, 2015.

  • The last day for a mortgage lender to have issued the 2010 Good Faith Estimate was October 2, 2015
  • All mortgage loan applications that have been originated on or before October 2nd, 2015, the 2015 Good Faith Estimate was used
  • As of October 3rd, 2015, the Good Faith Estimated Replaced with the CFPB Loan Estimate
  • Lenders who were not ready on October 3rd, 2015 to use the CFPB’s Loans Estimate could not originate any mortgage loans

This was because mortgage loans that were not originated under the CFPB Loan Estimate will not be saleable.

The Good Faith Estimated Replaced With CFPB Loan Estimate

What is a good faith estimate replaced by a CFPB loan estimate

The purpose of the Consumer Financial Protection Bureau’s creation and launch of the Loan Estimate, also referred to as LE, was to eliminate the flawed HUD’s 2010 GFE.

  • The mission of The Good Faith Estimate Replaced with the Loan Estimate was to improve and make the disclosure much easier to understand for the public customer and simplify the old 2010 GFE
  • There have been many criticisms of the CFPB Loan Estimate since the launching of it
  • Many mortgage industry professionals are already seeing the similarities between the 2010 Good Faith Estimate and the New Loans Estimate such as not being able to fully disclose the accurate title charges to borrowers

Also, the fact that it will not be able to re-issue a Loan Estimate if the disclosures have been disclosed with a TBD Address.

Mortgage Disclosures For Borrowers

Whether the CFPB Loan Estimate will be better than the 2010 Good Faith Estimate, time will tell.

  • One of the major negatives with the new mortgage disclosures that have been implemented by the Consumer Protection Financial Bureau is the delay of closing a mortgage loan after the Closing Disclosure has been issued
  • The Closing Disclosure replaces the HUD-1
  • The issue is that once a clear to close has been issued, borrowers need to wait three days to close on a home loan after receiving the Closing Disclosures
  • If borrowers receive the Closing Disclosure and the Closing Disclosure contains errors, then lenders need to correct the errors
  • A new closing disclosure needs to be re-issued
  • Borrowers need to wait an additional three days to close
  • This 3 day waiting period on home purchase transactions has already been creating chaos for home buyers, home sellers, and title companies
  • Lenders will need to add more compliance personnel which means more costs and overhead which means these costs are passed on to the consumer

As for the new Loan Estimate, we will keep our viewers informed as of how much better it is from the 2010 Good Faith Estimate.