New Good Faith Estimate has unintended effects

The new Good Faith Estimate (GFE) went into effect at the beginning of the year.

Its aim is to protect the consumer against hidden fees and enable borrowers without advanced degrees in accounting or law to compare apples and oranges.  Previously, GFEs had a way of departing from reality at the closing table.

As mortgage broker Bruce Maasbach and others have written, from which I am shamelessly quoting without little additional attribution, the new GFE rules require lenders to disclose and estimate all the closing costs outside of their own fees accurately.

The clincher is this: The lender must guarantee that the costs will not vary by more than 10 percent of the actual cost at the time of the closing. If so, the lender ends up paying them.