Bailout

The new standardized mortgage estimate

By Felix Salmon

James Hagerty is cautiously optimistic about the new, standardized good faith estimate form which has been mandated by the Department of Housing and Urban Development. If you get one of these forms from three or four different lenders, and they all fill out this table, then being able to choose the best mortgage for you is going to be much easier than it has been until now.

It might have been nice to include “adjusted origination charges” along with “total estimated settlement charges” on this form, because a conscientious consumer should shop around in any case for things like title insurance. Still, bundling everything into one figure at least gives lenders an incentive not to rip off their borrowers too much on those fees.

Is this going to make a big difference in practice? Are homebuyers going to spend as much time comparing different mortgages as they do comparing different televisions? Or are all those numbers always going to be so confusing that many people will end up just doing what they’ve historically done, which is trust a mortgage broker?

My hope is that a few big lenders are going to take a leaf out of Progressive’s book, and encourage homebuyers to shop around, making it as easy as possible to compare different offers. But one thing’s for sure: if your mortgage broker doesn’t show you different options in this kind of ultra-clear standardized format, find a different mortgage broker.

Full post as published by Macroprudential on December 31, 2009 (boomark / email).