The new standardized mortgage estimate
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James Hagerty is cautiously optimistic about the new, standardized good faith estimate form which has been mandated by the Department of Housing and Urban Development. If you get one of these forms from three or four different lenders, and they all fill out this table, then being able to choose the best mortgage for you is going to be much easier than it has been until now.
It might have been nice to include “adjusted origination charges” along with “total estimated settlement charges” on this form, because a conscientious consumer should shop around in any case for things like title insurance. Still, bundling everything into one figure at least gives lenders an incentive not to rip off their borrowers too much on those fees.
Is this going to make a big difference in practice? Are homebuyers going to spend as much time comparing different mortgages as they do comparing different televisions? Or are all those numbers always going to be so confusing that many people will end up just doing what they’ve historically done, which is trust a mortgage broker?
My hope is that a few big lenders are going to take a leaf out of Progressive’s book, and encourage homebuyers to shop around, making it as easy as possible to compare different offers. But one thing’s for sure: if your mortgage broker doesn’t show you different options in this kind of ultra-clear standardized format, find a different mortgage broker.
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If you can’t read a typical GFE you have no business buying a home, period.
Do you really think this will make a difference? Can you be so naive?
I used to listen to Bruce William and he *always* recommended bringing your own lawyer to a closing. *Always*. What has changed? Bruce is no rocket scientist and never made himself out to be sophisticated. But what he said made sense. It cost a little more, but it protected people.
But they don’t get their own counsel because they’re cheap. Then they get ripped off by unsavory dudes. And they they blame the system for not protecting them.
Predatory lending: stop me before I borrow again!
Nyetter, I am glad that you are the self-appointed gatekeeper to the world of home ownership.
If only he were: ownership rates would be in the low 20s and the residential real estate bubble would have popped with no systemic effect.
Does this mean that all residential real estate is *not* going to be pre-privatised?
Perhaps the time has come to do as the Australians do and make home mortgages full recourse. That would certainly focus the deliberative faculties of prospective borrowers. Then again, as nyetter said, if you don’t have those faculties to begin with, you have no business assuming a mortgage.
It would be interesting to take a look at the performance of Australian loans in general. Specifically, Macquarie pushed out a first lien line of credit, especially in Australia, which tempted people with moderate to good credit, to max out their loans. It was accompanied by an explanation of how, *if used properly*, one could save far more money over a traditional loan. Did it end up getting used properly?
Better forms? More forms? Plainer language forms? Why do I have the feeling that something’s increasingly rotten in Washington? Does Congress have similar forms when they borrow? Let’s face it, Congress desperately needs some kind of similar form! If our ‘elected borrowers’ truly understood the costs of their borrowing, the consumer would never have need to play this implied and absurd role of dumb-ass.
US Housing crisis will grow larger in 2010 as strategic foreclosures increase from the 25% of the total they are today. Why stay in a mortgage when your neighborhood is renting at 1/3 the cost of your monthly mortgage? See a wild California foreclosure story at http://storyburn.com