Just a note on GFE's

[ArmyStrong]

I called my bank today (USAA) to get an updated GFE for my latest offer, and I was told that as of Jan 1st, banks are no longer permitted to give GFE's until you are under contract. That doesn't seem fair to the consumer, does it?

[Anonymous]

that can not be correct.  They may not be able to give you a official GFE per se, but they have to be able to provide you with expected loan costs and a rough idea of the closing costs on paper.  It may not be labeled the official GFE, but it should beasicly carry the same information (though not fully accurate until a house is under contract, etc).  Otherwise, how could you shop for loans if you could not compare the associated costs of the loans next to each other.

[ArmyStrong]

I thought the EXACT same thing. Didn't make sense to me. I'm gonna try'n get another one to verify.

[hawkeye33]

Yeah, that's one of the ABCs of home purchasing, right? You should shop around and get a prequalification before you even start looking at homes so that you're looking at the RIGHT homes. If lenders were unable to give GFE-type information prior to you signing a contract, it seems that would cause a lot more difficulty with lenders getting a bunch of loan applications for loans that aren't a good fit for the buyer because they weren't empowered with the right info during their house hunting.

I would think some sort of caveat language (this is unofficial, this does not constitute a guarantee of loan, etc.) on the GFE form would be appropriate rather than telling people they can't have the information. But I actually assumed that that language is already on those GFEs. Hmmm...

[Anonymous]

I was curious about this so I did some reading.  As of Jan 1, 2010 they have to use a new GFE.  It requires them to give you a GFE within three days of submitting all the necessary information.  But it goes on to say lenders can't require verification of your information until you decide to proceed.  To me it seems like they're being sticky.  I don't see why you couldn't give them hypothetical information (house costs $x, taxes are $y, my credit score is z, blah blah blah).  I would be interested to hear what other lenders are telling you.

Here's where I got my info -  http://www.hud.gov/news/release.cfm?content=pr08-175.cfm

Message Edited by rmily on 01-10-2010 10:27 AM

[ArmyStrong]

If I'm reading it correctly, I guess that would be great for consumers. Will that HUD form be the standard "across the board"? Looks easier to follow than bank's general GFE's. The way the bank rep explained to me, it seemed like you couldn't get one until/unless you were already under contract.

[Lel]

An article came out in my local paper this weekend regarding the new GFE rules, and how lenders are coping with the new restrictions:

Lenders exploit a loophole

A quote from this article: "So how have the first two weeks of the reforms been going? Not exactly as planned. Many loan officers and lending institutions are sidestepping the new, price-bound GFE by giving shoppers 'worksheets' and 'loan scenario' forms that come with no legal requirements for accuracy, and were not even contemplated under the reforms. In effect they are substitutes for the new GFEs but, in the wrong hands, are wide open to lowballing and bait-and-switch games."

So now I understand the your lender's stance, though the explanation isn't accurate.  It's not that they cannot give a GFE, it's that they will not give one, and they're not required to do so.  They're trying to protect their right to make changes to the estimated closing costs, without being constrained by the new rules.

It appears that the law of unintended consequences applies again, just like the ratejacks and CLDs that many of us have experienced as a result of the Credit CARD Act.

[Anonymous]

That was a great explanation.  I guess if we want to shop lenders we have to add a few extra days of padding when picking a closing date on the contract.  Seems worthwhile to get a more accurate fee structure.  Hopefully it truly does benefit us in the end