New GFE Led to Accurate Fee Disclosures, Price Increases Exaggerated, Survey Shows
November 9, 2010
Fees disclosed on the new good faith estimate reflect a more accurate disclosure of fees and has not resulted in an increase of mortgage fees, according to a survey conducted by Ernst Publishing Co.
“The perception that the fees for county recordings, appraisals, credit reports and so forth have increased dramatically as a result of the good faith estimate is simply not correct,” said Jan Dalton Clark, vice president of marketing and sales for Ernst. “The GFEs provide accurate prices and those prices have remained flat or experienced increases in the low single digits.”
Ernst provided results from its “Ernst Good Faith Estimate” survey, which reflected the views of 226 respondents from lending institution that were polled from Oct. 11-Oct.16. Ernst has been the leading authority on land recording requirements for almost two decades, processing more than 120,000,000 transactions annually.
According to the survey, 57.5 percent of respondents reported county recording fees had increased 5 percent or less over the past 12 months. In fact, more than 50 percent of respondents noted that vendor controlled fees, such as appraisal, credit reports, title searches and so forth, had also increased 5 percent or less over the same time period. In addition, 51.4 percent reported that lender controlled fees increased 5 percent or less over the past 12 months.
“There is a perception in the mortgage industry that that the costs had risen a hefty 35 percent, but that is simply not the case, as our research indicates.” said Clark.
According to the survey, the reason for the confusion over fees is that the prices that appear on the good faith estimate are precise — and not understated as they were in the past — so some people assumed the higher prices reflected increases in the cost of fees.
Ernst’s research, however, shows that is not what has occurred.
“Forty-five percent of survey participants thought that the recently reported double-digit increase in closing costs that are reflected on the GFE are the result of more accurate reporting of the total funds needed to close a loan,” said Gregory E. Teal, president and CEO of Ernst. In contrast, just 36.8 percent of survey participants thought that the prices reflected increases in closing costs.
“The benefit of the GFE to all parties involved in a real estate transaction is that there can be more confidence in the estimates that are provided, and that’s good for our industry,” Teal said.