Mortgage Related Closing Costs

After a home loan appicant provides basic information to the mortgage broker or loan officer, the applicant receives a 4 page good faith estimate of closing costs. The first page will provide a standard summary of your estimated costs. The 3 additional pages provide details about the associated fees and tips on Mortgage Brokers Loan officers.

• The good faith estimate, or GFE, would have to be somewhat accurate. The total charges couldn't exceed the estimated total by more than 10 percent.
• The trade-off between interest rates and lender's fees would be clearer: A "no closing cost" mortgage has a higher rate than a home loan in which the borrower pays fees out of pocket.
• A broker's compensation from the lender, in the form of yield-spread premiums, would have to be disclosed.
• It would be easier to compare the numbers on the good faith estimate with the numbers on the final HUD-1 statement of fees. The HUD-1 is the final statement of mortgage-related fees that the borrower gets at closing. Right now, the GFE and HUD-1 don't have to look alike, making it difficult to compare them side-by-side to see how the fees changed between application and closing.
• Someone would have to read aloud a "closing script" that accurately summarizes the loan deal and the settlement charges. Any inconsistencies between the rate and fees described in the GFE and the final rate and fees would have to be pointed out.
• Many homebuilders have "affiliated business arrangements" with mortgage lenders and title companies. The builders tell homebuyers something like this: "If you don't use our approved mortgage company, you'll have to make a bigger earnest-money deposit, and you won't get a $2,000 'closing incentive.'" The proposed regulation seeks to ban that much-complained-about practice.

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