Blown Good Faith Estimates Part 2

I always love sparring with mortgage brokers and loan officers. I enjoy listening to them defend one another, their business practices, and the status quo of the industry. I particularly enjoy it when they try to defend the seemingly indefensible. Every time a little dust up between myself and other mortgage professionals occurs I remember why I write this blog – and what I hope to achieve by writing it – consumers who are better educated about the process so that they can protect their homes and their family when refinancing or purchasing a piece of real estate.

So, it was the other day when I posted the Blown Good Faith Estimate with my brash writings about the short comings of the Good Faith Estimate that I posted on my web site. I belong to a community of real estate and mortgage folks called Active Rain (its like MySpace for real estate folks). I posted the Good Faith Estimate there (just for fun) and called it a Blown Good Faith Estimate.

After posting it I spent the better part of my morning being verbally attacked by mortgage folks for posting it as they defended its legitimacy and derided my comments about it. Take a look at it first, so you can enjoy some of the comments.

Here are what mortgage "pros" thought about the GFE:

I agree with some of the things that you mentioned. But 2 things that stand out that you jumped on that you are assuming. The rate… you said, "not a chance"….. how do you know what type of loan this is? It could be an adjustable, even though it doesn’t say it on the GFE. Broker fee….. you can do loans that don’t charge much. Okay… so you call one fee they charged a junk fee…. but they have no other fees. ???

Again, sure… some things mentioned are so true. And yes, you can get that rate, but it would cost several points. So it’s hard to have both. But maybe they are doing some type of Option Arm…. there are hits to the rate…. and you could get 2 points as a YSP… so, maybe this is true. Did you ask the client what type of mortgage that they were told? If so, I would add that into this blog. You need more information to rip into a good faith estimate. That’s at least my opinion.

And,

The "junk fees" section is slightly inappropriate as well. I list my processing fee there because I have a processor who does alot of the dirty work of coordinating with appraisers, title companies, lenders if I have to broker, underwriters and the consumer to get all documentation needed to close this deal. This person works quite hard for that $350 or so per file. They are actually the glue that gets the file done. And since they are a third party, its required that their fee is listed seperately on the HUD-1.

And,

Morgan-Granted the GFE was "light". My GFE’s are so full that many get a little scared; I include everything because I do not like surprises at closing. Besides, I like referrals

However, it seems as though you are misinforming customers. I have read a few of the comments (not all). Please make sure that you are properly educated on GFE’s before you advise customers.

And,

Your terminology for "junk fee" is offensive. I earn every cent I make on a loan. I work for my customers. My time, knowledge, and hard work is notjunk. I know that is the common term, but did we tell an attorney that his retainer fee is junk? How about your paediatrician? Better yet, do you work for free? Is your company a non-profit organization? I am going to go out on a limb here and say no.

And,

Some other words of advice, your wording on the GFE’s while you are pointing things out could be more professional. You should not put a competitor down, just educate your customer while staying positive.

And,

At the same time if I was comparing it to my GFE to a consumer I would be very careful to call anything "junk" or unnecessary. As we know fees are different for each of us depending on our companies and line of work, but that does not mean we can label them "junk".

You can read all of the comments here if you like. It is amusing to see mortgage folks get so bent out of shape and work as hard as possible to defend a clearly inadequate GFE. They were more worried about how the GFE would be "perceived by consumers" rather than whether the GFE was a bad one or not.

My final comment to everyone was:

To everyone that is picking out the individual parts of the GFE and why they could be correct why aren’t you looking at the complete picture and coming to the same conclusion that I have – the GFE is filled out incorrectly – hence a BLOWN GFE.

We can argue style points and line-by-line, lender-by-lender points all day long, but the overall reaction you should have is to question the validity of this GFE.

Funny, not one of them responded. What I was trying to show everyone is how ridiculous some of these GFEs get – instead of agreeing the mortgage pros who espouse their customer service and professionalism spent their morning trying to defend what is clearly a bad GFE. Hilarious – or not if your one of their customers.