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Good Faith Estimate

THREE IMPACTS YOU NEED TO KNOW

Pickford Escrow’s job is to be on top of all the latest regulatory changes so that we can close your Encinitas home deals smoothly. Pickford Escrow, one of Gary’s winning team members, searves as the escrow experts in each Encinitas real estate transaction AND there are things you need to know so that you can be better educated. Here are three of them.

1) New RESPA Reform Good Faith Estimate (GFE)Good Faith Estimate (GFE)
Changes should help Encinitas buyers avoid surprise charges at closing, have the ability to shop for the best loan, and ultimately feel more informed about the all-in cost of the transaction.  The new GFE is required on any mortgage application taken on or after January 1, 2010 (with a property identified) – although there is no penalty until the second half of 2010 for not using it.
Additionally, Escrow and Title Agents will be required to provide borrowers with the new RESPA Reform HUD-1 settlement statement that closely aligns with the new GFE, for any closing originated after January 1, 2010 or prior if the new GFE was used.
2) New RESPA Reform HUD-1
The new settlement statement on your Encinitas home transaction has been increased from two to three pages.  It includes a side-by-side comparison chart to help Encinitas home loan borrowers compare the final loan terms disclosed on their latest GFE with the charges shown on the HUD-1.  Encinitas Buyer’s and Encinitas Seller’s will now be required to sign an estimated HUD-1 rather than or in addition to an estimated settlement statement.  Business Impact: ALL charges are disclosed on the HUD-1 for the Encinitas borrower to review and compare to the GFE. If some charges differ by more than 10% at settlement, this may cause delays in closing (see Page 3 of the New GFE for an explanation of what charges can change and what cannot). Escrow will be sending fees to the Lender early in the process to help ensure accurate GFE and HUD-1’s.
3) Time line impact
In the event the estimated HUD-1 shows an increase of more than 10% of those to fees subject to tolerance increases, the closing may be delayed.  The lender must work with the Escrow and/or Title Company to determine if the change requires a revised GFE to be issued to the borrower. (For a new GFE to be issued there must be a “changed circumstance” i.e. rate change or loan product change).

If the charges result in an increase in the APR of more than .125%, there may be an additional timing impact since a PreClosing TIL will need to be provided.
Business Impact: Two potential closing delays:
(1) A revised GFE must be provided to the borrower allowing ata least 1 business day for their review prior to closing. 
(2) If the APR increases more than .125%, the Truth in Lending (TIL) disclosure (we call it a PreClosing TIL) must be reissued at least 7 business days prior to closing. By law this allows 3 business days for mailing and provides the customers with the time required to determine if they are comfortable with their loan choice.
NOTE: TO BRING THE FEES WITHIN TOLERANCE it is AGAINST THE LAW for a lender or agent to ask the ESCROW OR TITLE COMPANY to change their fees.

To find out about this and more Encinitas real estate information, contact Gary Harmon, your Encinitas Realtor.