2012 gave us plenty of time to see how the new mortgage laws have played out, both for home buyers and home owners refinancing. Here are my votes for the best and the worst new laws.

THE BEST NEW LENDING LAW

It seems the Feds took a tip straight out of my book, Mortgage Rip-Offs and Money Savers, by passing a law that states the lender’s fees cannot increase after they give you a Good Faith Estimate (GFE) and you accept it within ten days. This has eliminated surprise fees from popping up at the time of closing–a common occurrence I warned people about. No more bait-and-switch! No more finding a new $500 fee at closing! This is a law we needed, and it has saved borrowers hundreds of dollars.

THE WORST NEW LENDING LAW

It’s hard to pick just one, but the law that says the convoluted 3-page GFE designed by the Feds is a contractually binding document is just plain stupid. And I don’t use that word very often. Since when is an estimate a contract? Because of this law, it is impossible for a loan officer to provide a GFE up front. How could anyone offer a loan contract without verifying credit, income, and assets? This law has forced all lenders to rename the upfront GFE to something different.

The form used most often as a GFE before (a great form that was the favorite of most mortgage brokers and my personal favorite) is now titled “Initial Fees Worksheet.” Banks have their own forms with titles such as “Cost Estimate Worksheet” and “Cost Analysis.”

The result has been nothing but confusion. No benefit, no help, no transparency, only confusion.

Let’s hope 2013 brings more common sense, more savings, and more clarity back into federally-required mortgage documents.

Thank you for reading and recommending my books: Mortgage Rip-offs and Money Savers, and Homebuyers Beware. Thank you to all the good folks who emailed to let me know how much money they saved because of this information. It’s for you that I write!

Happy New Year!