May 06, 2011 11:30AM By Kenneth R. Harney
What if the federal government spent years designing a tool to help consumers shop intelligently for mortgages — comparing lenders’ rates, terms and total settlement costs — but consumers ignored it or didn’t use it?
No need to speculate here; it appears to have already happened. A new survey of 1,000 American consumers suggests that the “good-faith estimate” disclosures that all homebuyers and refinancers receive at loan application to facilitate shopping are not getting the job done.
Federally mandated good-faith estimates spell out the lender’s charges, all anticipated fees for title insurance, escrow and settlement services, plus other key costs. The most recent version of the GFE, released at the beginning of last year, contains space for consumers to take one lender’s estimates and get competing quotes from as many as three others. It also requires lenders to stand behind their estimates — guaranteeing that some of them won’t increase by even a penny at closing, and others won’t increase by more than 10 percent.