Good Faith Estimate Should Match HUD1 Settlement At Close

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MORENO VALLEY, Calif. — Steve VanSickler, VP of lending and collections for Visterra CU, Moreno Valley, Calif., said recent legislation has placed "great burdens" on the mortgage industry participants that "were heretofore unregulated for the most part."

Still, VanSickler does not believe the new regulations have been burdensome to CUs, especially those "whose mortgage lending operations were being run by true mortgage professionals."

"Mortgage lending is a complex transaction that involves many moving parts and typically a significant loan obligation to our members, so from that perspective there are inherent risks that need oversight by both a lender and on behalf of the consumer," he said. "Attempts to simplify the good faith estimate have essentially failed, as additional documents are being used to clarify the costs involved in a residential real estate loan transaction. Most industry professionals want a good faith estimate that essentially matches the HUD1 settlement statement at closing, something I would greatly support.'"

According to VanSickler, another viable option would be to simply state the interest rate and the sum of all borrower costs, which he said would make it "very simple" for a consumer to compare offers for the same loan type.

One good result of the new laws, he continued, is consumers have "much greater clarity" with respect to the types of loan they are getting. Were VanSickler to be made lending law czar, he would implement the following rules for credit union mortgage lending: "What doesn't get tracked does not get done, so I would like to see the NCUA require on call reports the number and dollar amount of purchase-money first mortgages granted, both quarterly and annually. Purchase-money transactions not only smooth out the swings in loan production when a credit union primarily relies on refinance transactions, but helping families to buy a home should be a significant part of what we are about. If this were tracked then it would become top of mind to a credit union's senior management team, especially when it is compared on a peer basis."

Second, VanSickler would like to see CUs report what percentage of their first mortgages granted or held were written above 80% LTV and how many are covered by mortgage insurance.

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