Your article "Respa Rule Delays Many Mortgages, Torpedoes Others" [Jan. 27] perfectly describes what is happening as a result of the new good-faith estimate and the rules associated with the new format.

It is a clear example of how government should not be directly involved in the mortgage lending business.

The objective of this legislation is right on target. The means to get there is completely off base and a waste of time, money and resources necessary to comply.

The objectives are as follows: Give borrowers a good-faith estimate they can count on; use a standard GFE to simplify the shopping process, and verify the actual fees at closing to match the GFE within a reasonable tolerance.

Why does meeting these objectives require a three-page form?

Why doesn't the new form reflect a detailed monthly payment breakdown?

Why doesn't the new form provide a "cash due at closing" amount?

Why is it necessary to explain the new rules in a 50-page-plus list of frequently asked questions?

Why are prepaid items for per diem interest, taxes and insurance included with the settlement charges?

Why does the term "zero tolerance" exist?

Why is the term "act of God" included to define when a change can occur?

Every mortgage lender and loan officer I know already stands by their GFE. Any changes are a result of an event during the process or of the borrower's choosing a settlement agent that the lender did not suggest.

The objectives could have been easy to meet by:

  • Creating a standard, one-page GFE form. Numerous different forms have been used for years and provide everything the borrower needs and wants to know. It would be very easy to combine the best features of all those forms on one page.
  • Specifying a tolerance amount based on the total of all closing costs. This amount is certainly debatable, but make it easy for the borrower. For example: Total closing costs = $4000. This amount cannot increase by more than X% or $X.
  • Showing prepaid items clearly and listing them separately. State that the amounts for taxes and insurance are truly based on estimates and it is the borrower's responsibility to verify the actual amounts.
  • Requiring that all closing attorneys/settlement agents receive the GFE as soon as possible and insuring that HUD agrees with the GFE, within the allowable tolerances.

There is a hidden agenda with this and all other recent lending law changes. Kill the small mortgage banker and mortgage broker, and control all mortgage lending within a few big banks.
The result will be awful customer service, higher rates, fewer loan options and delayed closings.

Larry Aronson
Senior vice president
Homeowners First Financial Corp.

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