Good Faith Estimates Minimize Closing Shock

While Kenneth Harney presented various statements about the mortgage lending industry fee/expense practices on a nationwide basis, (“ ‘Garbage,’ ‘Junk’ Fees Spur Consumer Lawsuits,” Your Mortgage, Aug. 21) it was unfortunate that he was unable to specifically discuss the practice occurring here in California.

The Department of Real Estate in their mortgage broker audits is specifically looking for the correct and complete presentation of estimated closing costs that the borrower should incur as the result of a mortgage transaction. These anticipated costs must be presented to the borrower in writing at the time of the loan application or within three days following this activity. The borrower must sign and date the Good Faith Estimate of Financing Charges, which signifies their understanding and acknowledgment of these fees.

Moreover, the licensed representative of the company or banking institution must also sign and date the papers to signify that they have reviewed these anticipated charges with the borrower.

Finally, when a mortgage loan package is submitted to a financial institution for purposes of underwriting and funding, this organization will immediately mail another edition of the Good Faith Estimate to the borrower. Thus they have twice been informed of the anticipated charges and have acknowledged these same figures.

If this activity is done correctly, there should be minimal “surprises” of new fees at the completion of the transaction.

JACK CLEARY, Mortgage Broker, Santa Ana