Raise Your Good Faith Estimate Compliance
One of the most common violations that examiners find in RESPA is the failure to send out the Good Faith Estimate within three days of application. It just isn't always possible to get in the application, generate a GFE, and get it into the mail within three days. It doesn't need to be this difficult.GFE's are nothing more than estimates made in good faith. Unlike Truth in Lending where the test is absolute accuracy, the measurement for GFEs is simply ballpark. It should be in the ballpark, not simply somewhere near it. That's what good faith means. Your examiner will compare the HUD-1s to the GFEs to see that you didn't stray too far.
The good news is that the GFE doesn't have to be transaction specific. Estimates can be provided by using percentages. For example, points can be entered as "3% of loan amount". This way, the GFE can be pre-printed and you can give them to applicants at the same time that you give them the application form - and the HUD booklet, and the ARM disclosure, and the transfer of servicing notice, and so forth.
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 12 & 13, 10/97
First published on 10/01/1997