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HUD announces 120-day Retraint for enforcement of the new Real Estate Settlement Procedures Act (RESPA)... but will it save my paycheck? 

I recently wrote a post about the new 2010 Good Faith Estimate form. Looks like the powers that be are going to give everyone a break while we get this mess straightened out.

Now that I have a several Sacramento mortgage applications under my belt since the new change, I can tell you this new form has led to some real confusion for borrowers. Although I mentioned that this new Good Faith Estimate is laid out in a much more user friendly way (I am trying to remain positive here)... there are some really big missing pieces of information the consumer needs to make a decision.

This like...

• How much money they need to close the deal!
  
• How much their complete monthly payment is!
  The current form's payment does not include taxes and insurance... this is just stupid! Talk about not giving the clients all the information they need to make a decision.

.....Insert BIG SIGH here.....

Do you know how difficult it is to sit down with a new client and not be able to provide them with the information they need to make a decision?

You see consumers have been trained to look at the Good Faith Estimate for their answer.  Since the new 2010 Good Faith Estimate Form has been implemented, we find ourselves saying things like .... You are just going to have to trust me.... And... Ignore this form and look at this one instead to get your answer! It is just ridiculous! We are supposed to be professionals here. 

I think my corporate office said it best...."Never in my 25 plus years in the mortgage business, have I seen the implementation of a change bring our entire industry to a screeching halt.  You have to at least chuckle (a little) that our business is all about "numbers" and we can't figure out how to get them right."

After the initial shock of how crappy this new Good Faith Estimate Form is and several hours on the phone with the powers that be... We have got a company policy in place to complete these forms. The problem is every lender has a different interpretation of how this new Good Faith Estimate should be completed.

Even though HUD recently announced a 120-day retraint in RESPA enforcement rule 2010 (giving the lenders and banks a break if their files are audited) .... It still does not mean our paychecks are not at risk!

You see it is up to the wholesale lender to determine if we have completed this disclosure right or not. The new form makes us responsible for many of the fees in the transaction. So not only do we have to get our fees exact... Which is fine by me since we honor our fees anyways... BUT (depending on the lender's interpretation) we could be responsible for titles fees, recording fees, pest inspection fees, city transfer fees...!  Some of these fees fall into a category that only allows for a 10% variance in price from the original quote. If we are wrong or got bad information... we eat the difference!

To say the least these first couple weeks of 2010 have been interesting! To be safe in the beginning we padded the heck out of the Good Faith Estimate to make sure we built in cushion for ourselves. This is not fair to the borrower frankly because they are not getting a true estimate!

It is what it is and we are all still trying to work out the kinks. We have mentally prepared for some loss in commission and if and when it happens... we will not be surprised.

Just another day in the life of a Sacramento mortgage broker!

**** Many of the wholesale lenders sent out emails that described this 120 day period as a moratorium... I found that verbiage to confuse people and have since updated my post to reflect HUD's press release above. *****