Jack M. Guttentag The Mortgage Professor

Yahoo! Finance User - Monday, July 7, 2008, 7:46PM ET  Report Abuse

• Overall: 1/5

Jack you are a fool to put your neck out on this one when it has not been approved nor will it be in it's present form. It is a poorly written and poorly planned set of ideas that only will cause more confusion and cost to homeowners!

Da Big Guy - Monday, July 7, 2008, 4:12PM ET  Report Abuse

• Overall: 2/5

This country has gotten used to broken contracts and renegotiation let alone commitment!

bp - Sunday, July 6, 2008, 5:32PM ET  Report Abuse

• Overall: 1/5

Price volatility is CONSTANT, not day to day. Pricing is based on the bond market and it can have big swings within a day. So, the only time that you can commit to a rate is as you lock the rate. As for the 6 or 7 items to commit to a pre-approval: What if the subject property is a manufactured home? Condotel? Not on the Fannie Mae Approved Condo list? Not on the FHA Approved Condo list? What if the person is on the LDP/GSA list? What if the person owns a home that is upside down and claims to be moving in to the new home....yeah, exactly??? The only way to really compare would be to have all your lenders comparing at the same time. This is unrealistic, but you could update GFEs to show exactly who gets what money and then you could get RATE LOCK QUOTES at the same time. Here is the kicker...you have to have a FULLY UNDERWRITTEN APPROVAL, READY FOR DOCS in order to get true RATE LOCK QUOTES!!! I just think of how many people have ever said, "...word problems, when will I ever use word problems?" Well, your mortgage is one big word problem....maybe you should have paid attention in class!

SandyLady - Saturday, July 5, 2008, 3:02PM ET  Report Abuse

• Overall: 4/5

Any information that a borrower can use to understand the final loan is useful. I've tossed out several loan "packages" from banks while recently shopping for a HELOC (with good to excellent credit, low 700's) due to the fact that there are far too many "coulda, mighta, maybe and the best sentence of all..."rates and fees set at our sole discretion", along with assorted and various other fees for a supposed "no closing cost loan", all of which never detail what the interest rate is, term of loan, or annual fees in clear language without wading thru all the aforementioned Yadda, Yadda garbage that would take an attorney to puzzle out (maybe and maybe not).....my next stop is a mortgage broker!

Yahoo! Finance User - Friday, July 4, 2008, 1:57AM ET  Report Abuse

• Overall: 1/5

Jack, your a complete moron, the GFE is already a shopping tool. There is nothing wrong with it the way it is. Instead of writing useless articles like this one, why dont you write about something that actually means something to people, like HUDS proposal to eliminate down payment assistance? What do you think that is going to do to nationwide home putchases when 40% of all fha purchase loans utilize down payment assistance? Why dont you write about something that is going to eliminate alot of first time homebuyers instead of writing about this useless garbage which nobody cares about?

Thizzle Washington - Thursday, July 3, 2008, 6:39PM ET  Report Abuse

• Overall: 1/5

This is worse than Jack's Zillow Mortgage plug he wrote not long ago.

Yahoo! Finance User - Thursday, July 3, 2008, 2:50PM ET  Report Abuse

• Overall: 1/5

Isn't it the buyer's job to check the HUD against the GFE? My broker went over mine with me, as did my attorney. My interest rate was lower than the GFE. I wasn't surprised - my broker did a great job. I went to him after I spoke with a couple of banks with whom I do business. I got fed up with their poor service and went with a professional who knew what he was doing, explained the whole process, and who didn't try to skirt around the fee discussion. Speaking of which, did anyone know that BoA charges $50 for a pre-approval? Even for their CLIENTS?!?!

Yahoo! Finance User - Thursday, July 3, 2008, 1:04PM ET  Report Abuse

• Overall: 1/5

This is the reason the industry is in such dissaray. You have clueless people like Jack, giving out misinformation and poor information. Jack should write about what he knows,not what hedoesn't

Bernard - Wednesday, July 2, 2008, 7:12PM ET  Report Abuse

• Overall: 1/5

Useless article, do not shoot alway on the mortgage broker, the banks and their un-trained loan officer are often the worse and they do not have to comply with these rules! They do not have the mandatory education the mortgage brokers must do! They do not have to put on their GFE and also on the HUD1 the participation fees they receive but the mortgage broker have to disclose what he receive from the bank/lender! Why a different rules? The consumer will be better protected if everybody would have to comply to a same federal set of rules and disclosures. A beter use of this column would be for example to educate people to think in term of cost, not monthly payment.

Yahoo! Finance User - Wednesday, July 2, 2008, 4:48PM ET  Report Abuse

• Overall: 1/5

Jack..Jack..Jack..are we getting desperate to write about "something"? I've been in the industry for quite some time and have come to realize that savy clients will hold you to what you put in writing and those with less knowledge won't. Preying on stupidity will continue with or without a more standard GFE...The time spent writing this article should've been applied to providing future mortgage holders relevant educational tools. The old saying will remain true...."a fool and his property will soon be parted"

Yahoo! Finance User - Wednesday, July 2, 2008, 12:57PM ET  Report Abuse

• Overall: 1/5

This article just shoots holes in the proposed changes. How can this patsy support it? What an utter complete moron.

Bob - Wednesday, July 2, 2008, 7:10AM ET  Report Abuse

• Overall: 1/5

Spectacular article about nothing!

RANDY - Wednesday, July 2, 2008, 12:07AM ET  Report Abuse

• Overall: 1/5

I have been a loan officer for 23 years. I don't know what good faith estimate Jack is talking about but I can assure you that the one I use in Illinois does clearly itemizes all costs to borrower, current interest rate, and the total costs to borrower. I have issued many more GFE's prior to application than actual applications, and I encourage borrowers to get GFE's from other lenders to compare. With the many aspects of a loan process, to call the GFE a conditional commitment is insane. I have no idea where you are coming from on this one Jack, you need to get in touch with reality.

Yahoo! Finance User - Tuesday, July 1, 2008, 11:49PM ET  Report Abuse

• Overall: 1/5

The revampment of the GFE is fine if it is applied to ALL banks and lenders. In personal experience as owner of a mortgage brokerage and transacting hundreds of loans, my company's GFE's were within a few dollars of the final HUD. In many, many cases, the interest rates and fees we offered were lower than those offered by the "big banks'" retail branches by a substantial margin. The banks have been lobbying for legislation to damage and eventually squeeze out the mortgage brokers for years. Why? Because over the last 2 decades, mortgage brokers have dominated with a majority of all loan originations. Banks used their wholesale divisions (i.e. mortgage brokers) to go out and sell more of their product. IMHO, since the rise in the significance of the internet, banks see the future where most loans will be originated online. By eliminating the mortgage broker and taking the business direct, the banks will now be earning any points and yield spread premium previously earned by the brokers. This amounts to many billions of dollars. Direct bank employees only earn a bonus, That means higher earnings for the banks. This is where the industry is headed. In the end it's all about corporate profits. The economic downturn has hurt everyone involved for sure. Almost all of the banks which were offering subprime and Alt-A products have gone the way of the Dodo bird. But the largest banks will survive. I believe that the vast majority of mortgage brokers were quite accurate with their GFE's. Client's do and did hold us to our estimates on the GFE's at closing. I was always amazed how the direct lenders were able to make high points on the "back end", while still giving their clients a higher interest rate. But the client never saw the bank's back end earnings because it was a considered a "service release premium" rather than a "yield spread premium". The world needs a skapegoat for the subprime mortgage meltdown. I have heard many politicians on television talking about the "unscrupulous mortgage brokers". Yes they really said that. Remember, the lenders created the subprime products that created and offered $0 down 100% financing no income verification loans with as a low as a 560 score. It was the lenders that offered loans with 1% interest start rates. The brokers were simply selling the products that were available. Blaming the brokers for selling subprime products is like blaming a shoe store salesman for selling Nike or Reebok running shoes that did not wear well. If the government wants to make sure that another subprime mess does not happen again, it is a simple task. Simply limit the types of products that can be offered by lenders and require minimum down payments and credit score for each of those products. If buyers are made accountable for their purchases by investing at least 10% of the purchase price of their own money, they will be less likely to make frivolous purchases. The market has already corrected itself. Almost all loans available today are conforming and FHA loans. Many of the banks that created and sold the ridiculous loan products are out of business or their stock valuations are down 70%. Most mortgage brokers are out of business whether they deserve it or not. And the real estate speculators that were buying several investment properties at the same time are facing certain foreclosure, are broke are have ruined their credit. There is no need for punitive measures. Nor will such measures serve any purpose other that to make politicians look like they are getting something accomplished by making somebody, anybody pay for the subprime mess. What is needed is for the country to go back to the days when a 10% down payment and good credit was required to buy a home. And when you did get a mortgage, it was a 30 year fixed products. The further we got away from that, the more trouble we got into. If other products are offered such as adjustable mortgages, a higher credit score or down payment should be required.

scott n - Tuesday, July 1, 2008, 6:37PM ET  Report Abuse

• Overall: 1/5

banks do not have transperancy on how much they are making, and will not have any based on the new proposals, neither is the guy selling slurpees at 7-eleven. this is a slippery slope and should effect every retailer if it effects one mortgage brokerage, since we are essentially just dropshippers.

anthony - Tuesday, July 1, 2008, 6:18PM ET  Report Abuse

• Overall: 1/5

i really think this *ss doesn't know 1 thing about loans anymore. last loan he probably closed was in the 90's.

Yahoo! Finance User - Tuesday, July 1, 2008, 6:13PM ET  Report Abuse

• Overall: 4/5

Finally we get a financial column. Agree or disagree with the author, at least its not an article about clipping coupons or "spending within your means". These actions by HUD seem rather insignificant compared to what they could be doing by making restricted loan guarantees to help homeowners. But very little of the housing mess is the fault of HUD. You can blame Wall St. but those guys are taking it hard in the can right now. Originators? Maybe, but they don't operate without someone else footing the bill. Homeowners? I guess, but always in the past, the market weeded out the weaklings. No...I put the blame on the bond rating agencies who rubber stamped a $500k loan to a $25k/yr janitor with a AAA rating. Without them, none of this paper could have gotten sold for as cheap as it did. None of the mortgage companies would then have any underwriting. Thanks S&P and Moody's. You all get to keep your jobs and your houses. I wonder if this action by HUD is just a distraction, keeping our attention away from the bigger issues.

TED - Tuesday, July 1, 2008, 5:33PM ET  Report Abuse

• Overall: 1/5

Yield spream premiums ARE disclosed on the current GFE, despite what "The Professor" states. The new HUD proposal also requires title companies to read a lengthy summary of each loan at closing, and to certify that the settlement statement matches the initial GFE. What is the point and/or advantage of quoting rates/fees to a customer whose scores haven't been verified when there are scoring adjustments of some kind on almost all loans today? It's been estimated that producing the new GFE will be so time consuming that most lenders will charge a fee of $50-$75 just to do so. If that is the case, it's highly unlikely that borrowers will pursue multiple LP's for comparison sake. The bottom line is that HUD will just make it HARDER for many folks to get loans, just as happened when Illinois limited the cost of doing a mortgage to 3% of the total loan size. those with small loans had little few choices, and often had to stay with their high rate mortgages. There is nothing wrong with the current structure as long as borrowers are dealing with reputable lenders and are willing to walk away from deals that AREN'T what they were promised. After all, there is a three day right of recisson on refinances for that very purpose.....

Bob - Tuesday, July 1, 2008, 5:12PM ET  Report Abuse

• Overall: 1/5

The new GFE is a wonderful idea if and only if it is applied uniformly throughout the industry. But there is no intention fo rthat to happen. For example, a broker will be required to disclose yield premium (a financial term that has been twisted to make people think it is abusive). However, the BoA's and Countrywides (RIP) Wachovia etc do not have to disclose this even though the number is generally going to be more than a broker earns. It leads the borrower to think the broker is charging them for something the bank is not. Simply false and misleading at best. Most days the brokers beat the pricing of the banks (carve out the subprime industry) and that dominance is what has motivated the banks to lobby for legislation to hurt their competition. If a broker offers a borrower 6.0% with no points or other fees beyond appraisal etc and earns $2,000 as wholesale compensation paid by the wholesale lender, and the bank offers 6.125 with no points or other fees other than appraisal etc, who has done the better service for the borrower. If your answer is the bank you simply miss the entire boat. Making the initial GFE a loan commitment subject to verification of income is like inviting another financial crisis. At that point in the application process you do not know anything about credit quality, other debts and their relationship to the income stated and the ability of the borrower to repay. Undisclosed debts, alimony, child support, etc. Now if the borrower is buying a vacation home and does not qualify when the credit report provides a full picture of indebtedness of record and they need to shift to investment property at a higher rate but using rental income from the property to qualify, I am not sure this new legislation will allow the rate and fee changes. Looking back, I was around when RESPA was first enacted in the 70's. The current GFE and TIL do a pretty good job of showing the cost both in terms of closing day and long term yield. It is not the forms that need changing, simply the caps on earnings, which many states have already addressed. It is a typical show for the polls and will accomplsih nothing except to make some people like me say enough is enough. The worst offenders in the credit debacle are not the Mortgage Brokers, they are simply selling products concocted by BoA, Citi, Wachovia, Lehman, Bear Stearns, Chase etc etc. But somebody has to take it on the chin.

Yahoo! Finance User - Tuesday, July 1, 2008, 5:11PM ET  Report Abuse

• Overall: 1/5

TO: investmor03 I see you own a dictionary, how nice. Truly, there are bad apples in the wholesale mortgage industry. The same can be said of any financial industry, including retail mortgage lending. Your login makes me think if you looked around your own office you may see some flies buzzing overhead as well. Those who do not see big banks making small brokers into a scapegoat for everything that ails the mortgage industry are drinking the kool aid. How does it taste?

Yahoo! Finance User - Tuesday, July 1, 2008, 4:36PM ET  Report Abuse

• Overall: 1/5

Putting the ONUS on the processor will not solve the problem. The Loan Officers need to be held accountable, and be licensed to make sure that they are not "hurting" their clients, and putting them into bad loans that they will not be able to afford. Processors have plenty of responsibilities, and need a GOOD LOAN officer to make their lives and jobs more tolerable, especially in this volitle market we are experiencing.

McKenzieW - Tuesday, July 1, 2008, 4:09PM ET  Report Abuse

• Overall: 5/5

I see the mortgage brokers here are NOT HAPPY. Well, you had your time to obfuscate. Now it's time to be straight-up and deliver VALUE to the customer, rather than deceit. I've had enough bad faith from you guys.

Brandon - Tuesday, July 1, 2008, 3:14PM ET  Report Abuse

• Overall: 1/5

If you really want to reform the process so that consumers don't get increased rates and fees at closing, Instead of changing the Good Faith Estimate, require the lender to provide a lock confirmation that shows how the loan is priced. There are occasions where there are adjustments to the pricing as information is verified. Require the lender to update the lock with the pricing features that affected the change. Also Once a broker locks a loan with a lender. All of their fees need to be locked in with the lender at that time. Maybe set it up so that the only way a change can be made is for the borrower to sign a new estimate. These steps will prevent the lender or broker from baiting with a low rate and closing with a higher one.

Yahoo! Finance User - Tuesday, July 1, 2008, 2:54PM ET  Report Abuse

• Overall: 4/5

Reforming the GFE is a great idea but as a lender I have seen many GFEs from other lenders and they will just find ways to muddle the estimate and confuse the borrower. These things are writen by some smart people to keep disclosure from being clear. My gut feeling tells me that these changes are not as important as eliminating Wall Street from the game and that has happened for the most part with the debacle of the sub prime lenders and the loses of the big players. Lender offered what Wall Street gave them and are part to blame. Keep in mind most lenders are not MBAs in finance and where also equally duped with these loans. I am a lender and I have seen plenty of lenders be foreclosed apon with sub-prime loans and bad mortgages Keep in mind also that begining in 2000 real estate agents and home sellers shuned FHA loans ( because of lazziness ) and that ushered in the widespread use of the sub-prime loan. When you really look at the blame game. Whether its the housing bubble or the tech bubble or the oil bubble.You will always seem to find Wall Street and your financial advisor feeding it indirectly. Some thing different is happening this time. American homeowners and investors are getting it and have decided to rip off the big corporations and the banks, This could rival the great deppression when its all over with.

bankerboy - Tuesday, July 1, 2008, 2:36PM ET  Report Abuse

• Overall: 1/5

Governmental influence to appease the masses... The KEY peice of information missing is the credit score. Can you pull credit prior to issuing the decision? Some are advocating approvals without the most important information. In addition, those who will shop the GFE line for line among lenders will be the very ones who get hammered from premium pricing and gimmicks such as those offered by BOA and Countrywide. Thanks again for saving us from our selves!

Yahoo! Finance User - Tuesday, July 1, 2008, 2:17PM ET  Report Abuse

• Overall: 1/5

The best thing that can happen to banks and get this market back on its feet is for all of these financial institutions to get back to managing risk and not creating it for others to buy. I don't care about this article, I think if consumers would simply read what is placed before them, ask questions when they see something they don't understand and don't simply sign everything immediately just to get the process over with, they would be in much better shape. Standards are great for shopping, but nothing will change as long as there are idiots with pens and a need to keep up with Mr. Jones.

Yahoo! Finance User - Tuesday, July 1, 2008, 2:01PM ET  Report Abuse

• Overall: 5/5

way to go! this is exactly the kind of discussion that needs to be brought to light! thank you :)

R - Tuesday, July 1, 2008, 1:36PM ET  Report Abuse

• Overall: 1/5

BofA does not charge an origination and/or a discount fee on their No Fee Mortgage unless the borrower chooses to "buy down" the rate. Understand the product before you jump on here and slam a reputable lender without any knowledge of how the product works. You people need to do your research before spouting off like a bunch of uninformed idiots.

pbergn - Tuesday, July 1, 2008, 12:41PM ET  Report Abuse

• Overall: 1/5

There is nothing wrong with GFE the way it is today. I myself got several from mortgage brokers and banks, and got pretty good picture what to expect. And, when finally I went ahead, and got my mortgage, there were no surprises the GFE was pretty close to what I was actually charged by Bank of America. So, I do not see any reason to blame anyone, or even bring up the question about GFE. Most of the mortgage brokers are going from their way to explain all the points, APR's and APY's... They are doing pretty good job in average, and I have seen at least 8-10 brokers. The loan application and mortgage processes are as transparent as it gets. It is silly to blame GFE, crooked mortgage brokers or greedy banks for the mass wave of foreclosures. The reality is, that there is no crisis at all. The housing market is going through the correction due to massive lose in consumer spending confidence. This is the plane truth as it is, and there is no need to spin it any further, err, Professor Higgins?!

Yahoo! Finance User - Tuesday, July 1, 2008, 11:59AM ET  Report Abuse

• Overall: 1/5

Absolutely agree with the last comment. Mortgage Brokers already disclose compensation as required while direct retail lenders and bankers do not. Why are they exempt? Anyone reviewed a GFE from Bank of America on their No Fee loan? What a joke. No Fee simply means they don't charge you an underwriting or processing fee...they do charge significant discount and origination fees, but the average consumer still can't figure out how to read the GFE so BofA gets away with it. All these reforms with new GFE's, disclosures, etc. are going to do is drive more consumers to direct retail lenders who do not disclose all fees and compensation. Very misleading to the general public, but, what do you expect from the bozos in D.C.? They have no clue how the real market operates.