December 4, 2022

Your Money: Rules for Reverse Mortgages May Become More Restrictive

Right now, practically anyone who is breathing can qualify for a reverse mortgage — no underwriting or credit scores necessary. But that might be about to change.

Most reverse mortgages, which allow homeowners 62 and older to tap their home equity, are made through the Department of Housing and Urban Development, whose Federal Housing Administration arm insures the loans. But declining home prices after the housing crisis took a big toll on the federal program. So did the popularity of one type of mortgage, which allowed homeowners to withdraw the maximum amount of money available in a big lump sum.

The F.H.A. eliminated that type of loan this year. And over the last few years, in an effort to strengthen the program, the agency raised its fees and reduced the amounts people could borrow.

But now, the F.H.A. says it will need to take even bigger steps by the beginning of its new fiscal year in October.

Because of the turmoil in the housing market and because many borrowers in the program didn’t have enough money to pay their property taxes and homeowners insurance over the long term, the F.H.A. wants to require borrowers to undergo a financial assessment. It may also factor in borrowers’ credit scores, something it has not done in the past.

Before the agency can do either, it needs Congressional approval. The House gave its assent last month, but it’s unclear whether the Senate will follow suit.

If the F.H.A. fails to get Congress’s blessing, it will have to take more draconian actions in the coming months, according to F.H.A. officials who did not want to be named because they were still working with Congress on the issue. That means that effective Oct. 1, yet another of its reverse mortgage products will probably be eliminated, leaving borrowers with options that would allow them to get access to 10 to 15 percent less cash than they can now.

“Instead of using a scalpel, they will have to use a hatchet,” said Christopher J. Mayer, professor of real estate, finance and economics at Columbia Business School, who is also a partner in a start-up company, Longbridge Financial, that provides reverse mortgages.

Borrowers who are now contemplating what is called a HECM (pronounced HECK-um) Standard (for home equity conversion mortgage) reverse mortgage should know that it could disappear in the fall. (Of course, that doesn’t mean borrowers should rush out and get one. We will probably know the fate of the loan sometime next month.)

With all reverse mortgages, the amount of cash you can obtain largely depends on the age of the youngest borrower, the home value and the prevailing interest rate. The older you are, the higher your home’s value and the lower the interest rate, the more money you can withdraw. You don’t have to make payments, but the interest is tacked onto the balance of the loan, which grows over time. When borrowers are ready to sell (or when they die), the bank takes its share of the proceeds from the sale, and borrowers or their heirs receive whatever is left, if anything.

Right now, using a “standard” reverse mortgage, a 65-year-old borrower with a home worth $400,000 could tap about $226,800 in cash or a line of credit after various fees, according to calculations by ReverseVision Inc., a reverse mortgage software company.

Borrowers can receive the money in several other ways, too, including payments over the life of the loan or in installments in higher amounts over a specific term.

If the F.H.A. were to eliminate the standard mortgage, the same borrower could instead use the “saver” reverse mortgage, which has lower fees but permits you to withdraw less: this homeowner could withdraw about $194,800, or 14 percent less than the “standard,” in cash or a line of credit, after all fees. (Another “saver” option would also be available; see the chart accompanying this article for more specifics).

F.H.A. officials told me that they would prefer to keep all of the agency’s mortgage offerings and instead put rules into place that would help ensure that they accept only borrowers who can actually afford to pay their property taxes and homeowners insurance, which is required to avoid foreclosure. Nearly 10 percent of reverse mortgage borrowers are in default because they failed to make those payments.

Article source:

F.H.A. Hopes to Avoid a Bailout by Treasury

An independent audit released on Friday projects that the agency’s expected losses will swamp its anticipated revenue, with a shortfall amounting to about $16.3 billion in its portfolio of insured home mortgages. That has raised the question of whether it will need an infusion of cash from taxpayers for the first time in its eight-decade history.

“This is the first time that they’ve totally run out of money,” said Representative Spencer Bachus, Republican of Alabama, said on Thursday. “They have about $600 million, as I understand, that they’re burning through. And within a month, because of the number of foreclosures, they indicated they will have to come to the American people and ask for money.”

But federal housing officials stressed that the shortfall was projected, and that they were adopting measures to avoid tapping taxpayer funds. Shaun Donovan, the secretary of housing and urban development, announced a series of steps to reduce losses and increase revenue at the F.H.A.

These measure include bumping up its annual mortgage insurance premiums on new loans by 10 basis points. That will cost borrowers about $13 a month, Mr. Donovan said. The F.H.A. will also sell off about 10,000 delinquent loans each quarter, increase short sales of homes where the loan exceeds the value and amplify its efforts to keep families in their homes, avoiding costly foreclosures.

The F.H.A. expects these changes, plus other measures it recently put into effect, to contribute $8 billion to $10 billion to its overall value in fiscal years 2013 and 2014. The agency said the new steps would begin as soon as January.

The agency also is asking Congress for new administrative capabilities to better manage its portfolio of loans and cut losses. “We need help from Congress,” Mr. Donovan said.

In a meeting with reporters, Carol J. Galante, F.H.A.’s acting commissioner, said, “It’s literally impossible to say that we will or won’t need a draw” from the Treasury at this point. “We’re doing all this to increase the likelihood that we will not.”

The F.H.A. insures a portfolio of more than $1 trillion in mortgages. The new actuarial report shows that it expects losses on its portfolio of loans originated between 1992 and 2009, including about $70 billion in expected insurance claims on loans endorsed between 2007 and 2009. The agency anticipates profits on insured loans originated from 2010 on.

During those years, some of the worst of the housing downturn, the F.H.A. continued to provide insurance on loans to help stabilize the housing market. “At some level, the government has already accepted” losses on those loans, Ms. Galante said. “They’re obligations of the government at this point.”

The F.H.A. also said loans where the seller put down money for a buyer’s down payment were a significant drain on its books.

Such “seller-funded down payment assistance” loans make up only 4 percent of the F.H.A.’s portfolio but account for 13 percent of its seriously delinquent loans. The F.H.A. said it expected to lose $15 billion on such loans, which it no longer insures.

Despite the projected shortfalls, the F.H.A. does not have an immediate need for cash, housing officials stressed.

“This does not mean F.H.A. has insufficient cash to pay insurance claims, a current operating deficit or will need to immediately draw funds from the Treasury,” a statement from the agency said.

The determination on whether F.H.A. needs to draw on the Treasury will come next fall, said federal housing officials. In February, the White House will perform its own projections of F.H.A.’s capital needs as part of its budget. Then, the F.H.A. will reassess its books as the fiscal year ends in September, and might request a bailout to shore up its capital ratio. Congress would not need to approve an F.H.A. draw from the Treasury.

Last year, the White House budget showed the F.H.A. in the red, but the agency improved its financial situation over the course of the year and did not require taxpayer financing.

Politicians in Washington, particularly Republicans, have voiced concerns that the F.H.A. could become a drain on the taxpayer, much like Fannie Mae and Freddie Mac. Those mortgage finance giants have not required additional taxpayer financing in recent quarters, as the housing market has stabilized. But they have nevertheless received about $190 billion in federal financing in the last four years.

The F.H.A. cites three reasons for its deteriorating financial position this year. First, its actuarial review uses “significantly lower” house price appreciation estimates than it used last year.

Second, low interest rates — while a boon for the housing market, as they drive refinancing activity and entice new borrowers to buy a house — have hurt the F.H.A.’s bottom line. More borrowers are paying off their mortgages, reducing revenue for the F.H.A. On top of that, borrowers who are not able to refinance are defaulting at higher rates, requiring higher F.H.A. payouts.

Finally, refinements to the forecasting model that the actuaries use led to a higher estimate of losses on defaults and reverse mortgages.

More broadly, the agency is still struggling from housing downturn — and its mission is, in part, to help make homes accessible to the millions of low-income people who might otherwise be shut out of the mortgage market.

Article source:

F.H.A. Audit Is Said to Show a Shortfall in Reserves

The Federal Housing Administration’s annual report is expected to show a sharp deterioration in the agency’s financial condition, including a shortfall in reserves, the result of escalating losses on the $1.1 trillion in mortgages that it insures, according to people with knowledge of the entity’s operations.

The F.H.A., the Department of Housing and Urban Development unit that insures home mortgages, reports on its capital reserves at the end of each fiscal year and makes projections for its financial position in the coming year. If the report, due later this week, showed that the F.H.A.’s capital reserves had fallen deep into negative territory, it would be a stark reversal from projections last year that it would show a positive economic value of $9.4 billion in 2012.

Capital reserves are kept to cover future losses. Outsiders have questioned whether the agency would some day need an infusion from Treasury if its reserves are insufficient.

Alex Wohl, a spokesman for the F.H.A., said, “We’re not going to comment on it until the actuarial report comes out on Friday.”

This year, the F.H.A. has tried to improve its financial position by raising the premiums that it levies on loans and increasing its volume significantly. But those efforts may have been negated by rising loan losses, even on mortgages that it insured long after the credit crisis took hold.

More than one in six F.H.A. loans are delinquent 30 days or more, according to Edward Pinto, a resident fellow at the American Enterprise Institute who specializes in housing. Delinquencies increased by 166,000 from June 30, 2011, to September 2012, he said, a 12 percent increase. Loans insured by the F.H.A. often allow very small down payments of 3.5 percent of the purchase price.

“There’s a fundamental problem with the F.H.A.,” Mr. Pinto said. “Its loans are too risky and that has to be addressed. It’s not the legacy book that’s creating all the problems. It’s beyond that.”

Brian Chappelle, a former F.H.A. official who is now at Potomac Partners, a mortgage consulting firm, said that he had not seen the audit report but that he had been told some of the shortfall resulted from less optimistic projections for home prices than were in last year’s audit.

“In and of itself, it doesn’t mean that they’re going to need a draw from the Treasury,” he said.

At the same time, “there is no question that F.H.A. was going to suffer,” he added. “The amazing thing is that F.H.A. stayed solvent for as long as it did.”

The F.H.A. is subject to a statutory capital requirement of 2 percent of loans, or about $22 billion on its $1.1 trillion portfolio. An economic value of negative $5 billion to $10 billion would leave the F.H.A. $27 billion to $32 billion short of this statutory requirement, Mr. Pinto said. This would be the fourth consecutive year that F.H.A. has failed to meet the requirement, he added.

Article source:

Bucks: AARP Files Another Reverse Mortgage Suit

In recent months, AARP Foundation Litigation has prodded the United States Department of Housing and Urban Development to reverse a rule change that had made it harder for some surviving spouses of reverse mortgage holders to stay in their homes. Now, the foundation is turning to the financial institutions that own and service the mortgages.

This week, the foundation, along with the law firms Mehri Skalet and Kerr Wagstaffe, filed a class action suit against both Wells Fargo and Fannie Mae on behalf of reverse mortgage holders and their heirs. The dispute is over what should be a simple question: Should heirs to a home that has an outstanding reverse mortgage pay the lender the remaining balance on the loan to clear the debt? Or should they merely write a check or get a new mortgage for the (often much smaller, nowadays) market value if they want to keep the home?

It’s yet another dispute born of the collapse in housing prices in some areas of the country, though it has a few twists because of the unique rules of reverse mortgages.

Reverse mortgages allow you to take equity out of your home without having to make monthly payments back to the bank, as you would with a home equity loan. How much you get depends on your age (you have to be at least 62) and the equity you have in your home in the first place, among other things.

AARP argues that upon death of a reverse mortgage borrower, say a single person, heirs are supposed to have a choice between paying off the loan, paying 95 percent of the home’s fair market value or giving the home to the lender in order to satisfy the loan. But Wells Fargo, acting as a servicer for Fannie Mae, told one of AARP’s named plaintiffs that he had no choice but to pay the full amount of the loan, even though the home was worth much less than that at the time he inherited it.

The root of the confusion about who owes what in these circumstances may lie in differing interpretations of the breadth of the HUD rule that AARP beat back a couple of months ago. It’s hard to say for sure though; a Fannie Mae spokeswoman declined my request to comment on the suit, citing the company’s policy of not talking about pending litigation. A Wells Fargo spokeswoman said that company was still reviewing the complaint and could not comment by the time this post went up.

Whatever your view of the law, however, an AARP lawyer, Jean Constantine-Davis, says that logic would suggest letting the heir buy the home at the fair market value. Given that most heirs couldn’t get a new standard mortgage from a bank for the actual reverse mortgage balance if that balance was more than the home’s actual market value, why wouldn’t Fannie Mae sell the home to the heir for fair market value? The alternative is to go through the trouble of foreclosing on it, listing it for sale and then selling it for that same fair market value to someone else.

In fact, Ms. Constantine-Davis notes, the heirs may pay more than fair market value, given their sentimental attachment to the family home.

Ms. Constantine-Davis’s point is a pretty good one, and she said she was unable to get Fannie Mae to respond to her and the other lawyers’ inquiries. So now we have another lawsuit.

Article source:

Mortgages: Sorting Through Lending Costs

Even before it officially opened for business on July 21, the Consumer Financial Protection Bureau, the federal agency created to oversee mortgage lending, started looking at loan shopping. The bureau is legally required to propose by July 2012 a way to streamline mortgage disclosure. It is exploring avenues for combining the two forms that borrowers get now — the three-page Good Faith Estimate and the two-page Truth in Lending Act form.

These forms tell would-be borrowers the terms of their loan — for instance, how payments on an adjustable-rate mortgage change. They also lay out fees.

Although interest rates grab attention, fees can make a big difference, said Eileen Anderson, senior vice president of the Community Development Corporation of Long Island, which provides home buyer education. The easiest way to compare loans, she said, remains the Annual Percentage Rate, or A.P.R. That calculation rolls in fees as well as the stated interest rate. Because lenders are required to follow the same formula, useful comparisons can be made. “That’s the best way to shop for a loan, whether it’s 10 years ago, or now,” she said.

In May, the Consumer Financial Protection Bureau solicited reactions to two versions of a form that combines the current forms onto one double-sided sheet. It received more than 13,000 comments. According to a bureau summary, people praised the effort, but had specific suggestions on layout and phrasing.

On June 27 the bureau posted two more revised versions. The comment period on them closed July 5; among those responding was the Mortgage Bankers Association, which said in a three-page letter that the proposals didn’t mesh with current laws, and also criticized the mechanics and design. The bureau says forms are evolving.

All this comes less than two years after the Department of Housing and Urban Development overhauled the Good Faith Estimate — an effort that involved years of soliciting comments and was mightily resisted by some in the lending industry. That form not only changed the way information was presented, but also required brokers and lenders to commit to many parts of their estimates — a big change, as previous estimates sometimes had little relationship to actual closing costs.

But the forms themselves are longer and, for some borrowers, more confusing than the previous ones, Ms. Anderson said.

The form is still “horrible, just horrible,” said Mark Yecies, an owner of SunQuest Funding, a lender in Cranford, N.J. “The G.F.E. doesn’t actually itemize the closing costs in such a way that makes it easy for a borrower to understand what they are.”

Still, he advises people to get the form from every lender they approach. “If you receive approximate closing costs in an e-mail or a form that is not the G.F.E.,” he said, “it doesn’t mean squat.”

He added that some lenders had become adept at manipulating the estimates, by providing interest-rate quotations that expire almost instantaneously, or by low-balling fees in instances where they have legal flexibility. “If you get two or three different G.F.E.’s and there’s several thousand dollars’ difference,” he said, “you know someone is playing games.”

But David Flores, a financial counselor with GreenPath Debt Solutions in New York, which provides home buyer education, says game playing is not as big a problem as it used to be. “We’re removed from the day when it was a 3 percent interest rate with a big asterisk,” with the asterisk leading to fine print about teaser rates, he said.

Borrowers seem to have learned a lot from the attention paid to shaky loans in the last few years, he said. “More people are asking the right questions when it comes to these adjustable rates and exotic loan types. More people are wise to them.”

Article source:

Bucks: What’s a Reasonable Home Down Payment?

Pretty much everyone agrees it’s a good idea for home buyers to put some of their own money down when borrowing to buy a house. Having a stake in the property, the thinking goes, encourages homeowners to keep making payments on the mortgage.

But how much of a down payment is reasonable? Ten percent? Twenty? Five?

Jay Laprete/Bloomberg News

That question is part of a debate in Congress and among a cluster of federal regulatory agencies as they try to craft new rules for mortgage lenders following the housing debacle.

As part of the financial reforms mandated last year by the Dodd-Frank law, the agencies, including the Federal Reserve, the Federal Deposit Insurance Commission, the Department of Housing and Urban Development and the Federal Housing Finance Agency, among others, must set criteria for what constitutes a reasonably safe, plain-vanilla mortgage.

Lenders issuing such mortgages — what are to be called “qualified residential mortgages”  — will be able to sell them to investors and avoid retaining any of the risk associated with a default of the loan on their own books. Loans that don’t meet the new standards won’t be considered qualified and will be considered riskier so the lender will have to retain 5 percent ownership. The goal is to encourage banks to thoroughly vet a borrower’s ability to repay the loan. In other words, the banks must have “skin in the game” for loans that don’t meet the standards by setting aside extra capital for possible defaults.

The agencies proposed requiring qualified mortgages to have a down payment of 20 percent, but that idea provoked a firestorm of opposition from an unusual alliance of banks, real estate agents and consumer housing advocates. The Center for Responsible Lending, which has been vociferous in urging financial reforms to protect borrowers, argued that 20 percent down, or even 10 percent down, would price many homeowners out of the mortgage market. Many creditworthy borrowers would find it difficult to meet the down payment rule and would end up paying more for their loans because lenders would boost interest rates on their loans to cover their extra costs, the center argued.

The group’s Web site has a chart showing the length of time it would take borrowers of different occupations to save enough for a 10 percent down payment. A public school teacher at the median salary of $33,530, for instance, would take 14 years to save enough cash to buy a $173,000 home.

Kathleen Day, spokeswoman for the center, said a borrower’s ability to repay a loan should be determined by thorough underwriting, that is, an assessment of risk through examining a borrower’s credit history, income and debt, by the lender.

“We’re not advocating for zero percent down,” says Kathleen Day, spokeswoman for the center. “We think down payments are good. But we think the market should set them, based on the underwriting.”

(Loans insured by the Federal Housing Agency, which can be obtained with small down payments, are exempt from the qualified mortgage mandates.)

Due to an outpouring of concern from the industry and consumer groups, as well as members of Congress, the regulatory agencies have extended the public comment period on the change to Aug. 1.

What do you think? Is it reasonable to set a minimum down payment for home loans?

Article source:

Bucks: How to File a Mortgage Bias Complaint

Last year, I wrote about how mortgage lenders were making it difficult for new parents to qualify for loans while they were home taking care of their babies. After the housing crisis, lenders began taking a closer look at these prospective borrowers whose income had temporarily fallen, even if they planned to return to work within a few weeks.

The news prompted the Department of Housing and Urban Development to investigate several lenders that might have discriminated against potential borrowers on the basis of their familial status, which would be in violation of the Fair Housing Act.

On Wednesday, HUD will announce that Cornerstone Mortgage, a Houston lender, has agreed to set aside $750,000 to compensate any women who may have been affected, while paying at least one woman $15,000. Cornerstone denied the accusations and maintained that all of its actions had been “legally and prudentially sound.” If no other women file claims, the money will be returned to Cornerstone.

But the department is also investigating nearly a dozen other cases at other lenders, and said it believed that other women might come forward.

As long as borrowers can prove that they are planning to return to work and that their regular income will qualify them for the mortgage, short-term leave should not be an issue. So if you think you may been discriminated against by Cornerstone or any other lenders, call HUD’s discrimination hotline at 1-800–669-9777. Or, you can file a complaint through its Web site.

Do you know of anyone who was denied a mortgage because their income temporarily fell?

Article source:

Mortgages: A Plan to Phase Out Fannie Mae and Freddie Mac

Consumers could see higher borrowing costs in the next year or so, along with a more limited number of financing choices, the experts say, because some of the proposed changes do not require Congressional approval and appear to already be in the works.

“There’s a lot of uncertainty in the process,” said Barry Zigas, the director of housing policy at the Consumer Federation of America, “but you’re probably going to get a better deal on a fixed-rate loan sooner rather than later.”

Mr. Zigas added that the 30-year fixed-rate mortgage — the plain-vanilla option favored by buyers for decades — might become harder to find and more expensive, because without agencies like Fannie and Freddie to buy these loans, banks may be less willing to extend credit at a fixed rate over such a long term.

John Mechem, a spokesman for the Mortgage Bankers Association, agreed with that assessment. “Traditionally,” he explained, “banks have been less willing to keep 30-year fixed-rate mortgages on their balance sheets, so in the absence of a vibrant securitization market, banks would more heavily favor adjustable-rate products.”

The plan, which calls for winding down Fannie and Freddie over the next five to seven years, was drafted by the Treasury Department, the Department of Housing and Urban Development and the White House, and was sent to Congress on Feb. 11. It proposes three options.

The most extensive of these options makes banks and other private lenders responsible for the entire mortgage industry, with the government helping only veterans, rural consumers and the neediest of borrowers.

Another option proposes limited assistance and government guarantees, in the form of borrower-paid fees or taxpayer-financed insurance, for most mortgages, in the event of a financial crisis like the subprime meltdown that began in 2008. The third envisions more government oversight of the mortgage industry and provides investors in home loans with “catastrophic reinsurance” in the event of a crisis.

The phase-out proposal also calls for a more limited role for the Federal Housing Administration, the insurer of low-down-payment mortgages that have grown popular among first-time buyers and those with weak credit or low income. It suggests raising the minimum down payment to 10 percent from 3.5 percent, and imposing that 10 percent minimum for Fannie and Freddie loans. F.H.A. is raising the mortgage insurance premium already — it is set to increase next month, to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans. The agency was considering a jump to 2.25 percent.

The proposal also calls for lowering the size of loans that Fannie Mae and Freddie Mac can insure; the limit, for loans in high-cost areas, is already set to drop, on Oct. 1, to $625,500 from $729,750. Larger, “jumbo” loans typically carry higher rates.

Some of the proposals — like those for lowering loan limits and raising the insurance premium and certain fees on Fannie, Freddie or F.H.A. loans — do not require Congressional approval. As a result, borrowers can expect to see those fees, tacked on to the interest rate of the loan, rise at least a quarter of a percentage point, according to Sarah Rosen Wartell, the executive vice president of the Center for American Progress, a liberal think tank. “This is all but certain in the short term,” she said.

Fannie Mae and Freddie Mac were created after the Depression to help Americans buy homes, but the agencies, buffeted by the mortgage crisis, have received more than $150 billion in taxpayer help. Fannie, Freddie and F.H.A. buy or insure about 97 percent of residential mortgages.

Article source:

Mortages: Problems With New Good Faith Estimate Forms

But industry experts say the three-page, line-by-line disclosure — which lenders must provide within three days of receiving a loan application — still falls short of telling borrowers exactly what they will be paying. Some in the mortgage industry complain that it can even distort or obscure the true cost.

The new Good Faith Estimate form “is better than it used to be, but it’s not up to snuff,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending, a consumer advocacy group. “There are things that need to be unbundled and made clearer,” she said.

The disclosure form, designed by the Department of Housing and Urban Development, became mandatory on Jan. 1, 2010, under the Real Estate Settlement Procedures Act that emerged from the mortgage crisis.

With the exception of certain fees, for services like title services and appraisals, lenders are bound to the costs they quote, notably those for origination and interest-rate locks.

The form also lists the services a borrower can shop around for, versus those selected by the lender. Charges for required services that the lender selects or that the borrower shops around for, using companies selected by the lender, can rise no more than 10 percent at closing. (An exception is fees for escrowed amounts and property taxes, costs that are beyond the control of the lender.)

The revised form, according to a consumer compliance alert issued last year by the Philadelphia branch of the Federal Reserve, is intended “to make the mortgage loan process more transparent to consumers, with fewer surprises at closing” in the form of higher fees.

But there are notable gaps.

The form, for example, does not break out seller-paid costs, such as transfer taxes, which are levied when a property changes hands, instead lumping those costs into the “total estimated settlement charges” figure at the bottom. (Transfer taxes, based on the sales price, vary by state; the combined New York State and city rate is 3.025 percent.)

As a result, borrowers are sometimes unknowingly looking at a larger final figure than they will actually have to pay. Nor does the new form account for down payments in the “total estimated settlement charges” column. Borrowers might then be looking at a smaller final number than they will need to pay.

This lack of clarity, according to Melissa Key, a spokeswoman for the Mortgage Bankers Association, can lead to delayed closings or even the loss of a locked interest rate.

Amid the uncertainty, a growing number of lenders have been furnishing consumers with their own custom “work sheets” as a supplement to — or in a few cases, in lieu of — the required disclosures, according to Brian Sullivan, a spokesman for the federal housing department. They were being used “to weed out window shoppers and borrowers who haven’t provided enough information for the lender to be required to furnish a G.F.E.,” he said.

But these work sheets may differ from the Good Faith form, further adding to the confusion.

Because Good Faith Estimates are binding on the lender, Mr. Sullivan said, some lenders appeared to be violating the new lending regulations by refraining from issuing the estimates, to avoid being locked into costs. He said that HUD would “intercede on the consumer’s behalf” if asked by the borrower, but only after lenders had been given a chance to correct any violations.

Still, the form may get yet another overhaul, by the new Consumer Financial Protection Bureau, itself part of the regulatory overhaul signed by President Obama last July. The bureau has said that it is considering revising the revised G.F.E. form to make all costs clearer to the consumer.

Article source: