I thought with the new GFE and all of the new regulations I would re-read my 1999 copy of Gordon Schlicke’s book “The Lighter Side of Lending”. I think every post about mortgages should start with the “history” of mortgages. Imagine, as Gordon points out, that the first mortgage was written on a rock. “If the borrower didn’t pay the rock was a convenient collection device”.
With the advent of the “New GFE” I wanted to take from Gordons’ book some items that made me laugh and cry at the same time.
“We are probably the most over regulated industry in America. The Government feels that all mortgage lenders are part of a grand national conspiracy to screw and defraud all who do business with us. I wouldn’t be surprised if the Flood Disaster Protection agency announces that in addition to being responsible for identifying a property is in a flood hazard area, lenders will now be responsible for any flood that occurs in their lending area.”
“I wouldn’t be surprised if one day I opened the latest guidelines and read: Seller-Servicers may approve loans not falling within the guidelines, but their loans may not be eligible for purchase-unless your underwriter weighs less than 150 lbs. and can bench press the combined weight of your board of directors.”
“New FHA rules effective July 1st have not yet been released. But officials said they will be effective July 1st anyway, regardless of when they are released.”
I thought the first quote was most appropriate because the new “GFE” makes me the loan officer responsible for third party costs. This rule must have been created by the same person that thought it should be required that I wear a helmet on my bicycle but I didn’t need one on my motorcycle. Just for the record because the federal government does not believe that I have taken an application if there is no address I can not provide a customer or Realtor a Good Faith Estimate before the borrower buys a home. Think about this just for a minute. I have their name, address, social security number, date of birth, sex, race, marital status. I know where they work, what they earn, what they have saved, how long they attended school, and I have a full credit report documenting an overdue account from the local library. But I have not taken their application therefore I cannot estimate their costs before they make the biggest decision of their lives.
The other two quotes simply made me laugh.