President Bush unveiled a proposal today to overhaul a 1974 law requiring lenders to give what's called a "good faith estimate". The goal of the overhaul is to make it simpler for consumers to comparison shop when they buy a house or refinance a mortgage.
Apparently the form has been HUD tested for several years. It includes a summary of loan terms terms, interest rate and monthly payment, whether the interest rate and principal balance can increase and by how much, whether the loan has a prepayment penalty or balloon payment, settlement costs and other details.
There will be a 60-day public comment period and the HUD proposal could actually go into effect before this summer.
The proposal is likely to face apprehensions from mortgage brokers, as it calls for
yield-spread premiums to be disclosed to borrowers.
Not sure that the industry is going to be able to fight further yield spread disclosure measures. Consumer confidence in this industry is probably at an all-time low and the government is looking for ways to restore it. For honest brokers disclosure should be less of an issue than some of the other measures that have been proposed. Maybe we can get jewelry, furniture, & auto dealers to disclose their markups! I won't hold my breath!
GFE Overhaul Proposal
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