Did GFE and HUD-1 changes end the world?
In January, people from title companies and mortgage companies were fanning out across the land to spread the word far and wide that the new Good Faith Estimate and new HUD-1 were the harbinger of the fall of civilization. Confusing to the professionals, it would surely put home buyers at a major disadvantage. Not to mention, it would require lenders and title companies alike to tighten up their fee structure and (gasp!) tell the truth about their fees.
Here we are, into the June, and I can’t tell the difference. To be fair, I am not a rockstar with a gazillion transactions to sift through but my little piece of anecdotal evidence is that the home buyer experience is no different from before. People who were prone to shop for loans to shave that last 1/8th point off their rate are still going to shop. Now, they just have a more level playing field on which to shop. The home buyer who trusts their loan officer or trusts the their Realtor to make a decent referral are going to stick with the original loan officer. There’s plenty of other stuff going on without having to worry about shopping for loans, too.
What buyers really hear
The home buyer at the settlement table still puts on their “thoughtful and interested” face while the HUD-1 is being reviewed by settlement attorney or settlement officer. My guess, though, is that what they really hear is “Blah, blah, blah, yadda, yadda, yadda — we need your cashier’s check for $30,805.67”. No one at any of the settlements I’ve been to since January has looked at the new Page 3. It probably doesn’t matter because the lenders are now being more careful about the “tolerance”.
What I’m getting at here, is that, all the hoopla to the contrary, the new GFE and HUD-1 may have actually been a good thing. It put the Fear of Government, if not the Fear of God, into lenders and title companies to be a bit more honest. Yet, to the home buyer, it hasn’t created any sort of wild and crazy behavior change.
I’m wondering about the experience of others. Has the new GFE and HUD-1 made a difference? Positive or negative?
Erica Ramus
June 7, 2010 at 8:18 am
Zero difference. Except in 1 case where the lender called the buyer a few hours before settlement, and told them that they could get 0.25% cheaper rate … but only if we settled 3 days later because it messed up the HUD 1 and GFE and we’d have to wait for 3 days to settle if they took the rate cut.
Buyers were annoyed lender even offered to do this AT THIS POINT. THeir moving truck was in the driveway of the new house, seller wanted their money, and everyone knew under the old structure, lender could just change the HUD 1 and do it. Now …. oh well.
Shea Bunch Augusta Ga Homes
June 7, 2010 at 5:49 pm
Nice post Ken. I agree that most buyers still only see the bottom line. I have yet to have the new GFE / HUD-1 make a difference on any of my closings.