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Don’t Have a Clue about the New HUD GFE?

Posted January 12, 2010 by Matthew Denton

How to understand the new GFE form

In 2008, the Housing and Urban Development (HUD) announced that on January 1, 2010, new Good Faith Estimate and HUD-1 forms shall be used by the real estate industry to facilitate a more transparent method of determining property information on key loan terms and closing costs.

That purpose was not met with much anticipation among some people. Some have argued that the new GFE form doesn’t make any difference at all. In fact, there’s hardly any change that they’ve noticed.

Many have also raised a question against the HUD about the forms. It was more complicated than what they thought it would be. But what’s to complain so much about a complicated property information form that was made a lot simpler by our housing department?

First of all, the form has been reduced to three from four pages in order to eliminate much of the paperwork that has to be accomplished. And it has an instruction page in plain English.

Second, total settlement charges can now be found on the first page for easier comparison of loan offers. The HUD will always specify any changes in the closing costs that can influence the settlement fees. Bundling into one value won’t make room for any rip off among lenders.

Third, both the GFE and HUD-1 forms require effortless comparison. The HUD has indicated each line with equivalent marks on where to find its equivalent in the HUD-1 form.

Fourth, real estate “junk fees” or those more known as other flat fees, technology fees, administrative fees, etc. that are asked by the broker on top of the commission are eliminated. That’s because closing costs are now consolidated in the form.

So what’s there to complain about when the HUD wants you to save more than $600 worth of closing costs?

You can download the GFE in this link .

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