Documents show terms and costs for residential mortgage purchase and refinance transactions
Entitle Direct Group, a title insurance company, said that it is in favour of the new Good Faith Estimate (GFE) and Hud-1 Settlement Statement documents that will show the terms and costs for residential mortgage purchase and refinance transactions. The company offers title insurance premiums that support the changes to these documents.
Lenders and mortgage brokers will be required to provide consumers with the new Good Faith Estimate (GFE) and Hud-1 Settlement Statement documents from January 1, 2010.
The new GFE document encourages consumers to shop and compare fees from various lenders before choosing a mortgage. The new Hud-1 Settlement Statement then allows borrowers to compare those quoted fees to their final costs before closing on a loan. A new page in the Hud-1 Settlement Statement document contains a chart which shows the actual fees charged compared to those fees that were listed on the GFE.
The chart identifies charges that should not have increased at all compared to the GFE, those that should not have increased by over 10% compared to the GFE, and those that can fluctuate. It also shows whether the consumer’s monthly payment will increase and, if so, when. This gives the borrower a very clear picture of what the closing expenses will be compared to what was shown on the GFE, so he or she can flag discrepancies and ask about them prior to closing, preventing surprise costs at closing.
On the other hand, the title insurance is often the closing cost. It is required by every lender, for both home purchases and mortgage refinances and the consumer pays for the policy at the time of closing. The consumers do not choose their title agent or purchase title insurance directly. Lenders, mortgage brokers, attorneys and real estate agents usually work directly with title companies to order the title search early in the closing process.
Timothy Dwyer, president and CEO of Entitle Direct Group, said: “Consumers often aren’t involved in their own closing process. Most are unaware of their final closing costs until they receive their HUD-1 Settlement Statement the day of their closing, when it is too late.