OMB is releasing the proposed reform to our lawmakers for a 15 day reading time then we’ll get to see it in the Federal Register.
People who say they know, say, the proposal will contain a 4 page GFE and a matching HUD. There is apparently a place on the HUD-1 in which the closer compares actual charges to those on the GFE and there is also a prepared statement of some sort that the closer will read to the borrowers.
There’s lots more and I am excited to say the least. Many people have worked very hard on these new rules trying to balance the interests of consumers and the industry. I won’t blame them at all for giving the consumer a more heavily weighted benefit.
Big news for me is that BUNDLED services seem to be out the window. I’m keeping my fingers crossed on that one and hoping the rumors are true.
Diane, Good luck with your new venture…how could you tempt us with this exciting new tidbit…please keep us posted!!! Thanks, Fran
Hey, Fran. We’re living in a pool of RESPA tidbits and hoping more drift in from the ether………;) HA!
It’s only 15 more days for the full story then we’ll have lots to chat about.
Diane, do you see that these changes will help at all with the consumer understanding of the mortgage process and their cost/obligation? Everytime I think about this, I just wish it could be simplified and not continuing to add paper and more wording that is foreign to the average consumer. Love to hear more!
Lisa: We’ll have to await the actual look and feel of the GFE and the HUD-1, but I am hopeful.
The gist of reforming these two key documents, I believe, will be in laying out data rather than having it crammed into one page which makes it hard to see the pieces and sections.
The final comparison of the GFE with actual HUD figures in the closing should do much for self-policing the habitual lowball quote crowd.
The folks at HUD can’t solve it all but look at this as a good first step.
We live in a society with a large population that is functionally illiterate. That means that no matter how simple or good you make disclosures, a large segment of the buying public will rely on the person they are doing business with and not the written word.
This means that much of what we need to do is to raise the bar and create a more reliable community of settlement service providers.
Stay tuned.
Agree and this in combination with continuing availablity of education through the internet, non-profits and positive messaging in the general media would be a terrific step in the right direction.
Until the government can give us a meaningful APR calculation (defining exactly what expenses are included in the calculation, accounting for differences in loan terms, and making the APR for ARMs less mysterious and more accurate), disclosures to consumers will continue to be inadequate. Mortgages are not credit cards and should not use the same disclosure as an AMEX.
As a loan officer, I created three amortization tables and graphs for anyone who took an ARM with me. One showed a “best case,” in which rates stayed at historial lows or at the floor rate of the program, another showed the worst case, with the rate hitting its historical high or its cap (whichever was most appropriate), and the last one was a “most likely” picture, incorporating the caps and the historical median rate. The graphs and big easy numbers made my clients feel more in control of their financing decision and more comfortable with me. Of course I had to do these by hand and it took a lot of time. If there was an established standard some clever geek could develop a program and save us all lots of time.
If any GEEKs out there are up to the challenge I have a paying job for you
seriously
Until required disclosures become easy to read and understand, people will continue to ignore them and will continue to be blindsided by rate changes.
Hi, Gina. Well, don’t everybody kill me at once, but I have to disagree. As someone who for years had to manually calculate APR including ARM APR and TIL, I think the federal guidelines are entirely clear. I also really like the methodology used in arriving at the APR for ARMS.
Truly, I think it’s all become too complicated because mortgage lenders either aren’t training their staff well or perhaps there are just loads of trainers out there who are confused.
On the ARM APR issue, I find it extremely easy to sit with a consumer and show them how their ARM would work if the rate index never changes. This, to me, is the best way to demonstrate is a way that consumers can understand, how caps work and just how deeply discounted their initial rate is.
Once again, the issue is training in my view, not the actual formulae.
Well this is quite the topic! But certainly a great one as we (in the industry) struggle with this, you can clearly see how the consumer would as well. I am in the middle with both Gina and Diane’s comments, as I do believe there have been challenges on correct calculations especially as we had experienced product nuances that the LOS systems weren’t programmed to accomodate.
Making this whole process one of simplified education (as Gina has tried to do in her business) with an industry standard that is meaningful for our originators and the consumer is the goal. The best approach is for all (regulators included) to be educated. Whatever we have to get that done effectively is the right thing for all of us.
If we see venues that are doing it right today, we should be promoting them. I do applaud Gina’s customer focus but lets help all originators get to something effective and consistent.
Agreed.
Raising the bar for entry and providing solid education for those who make it over the bar will go long way to re-establishing our professional industry. Trace talked a bit in a prior post about how hard it is to get licensed in the securities industry. If we had tough standards, we’d have articulate providers, like Gina, et al., in whose hands the consumer is safe.
And a PS on the education issues. I don’t know about you, but it really fries my brain to sit in a continuing education session with people who are reading novels, the newspaper, texting, and generally playing around. If we get serious about education, let’s give the teacher the ability void credit or remove someone from the room if they misbehave. Bodily attendance in an education session should ain’t gonna cut it.