Borrowers reacting in “Good Faith” to new loan disclosure requirements

The advent of new federal loan disclosure requirements for lenders has already produced more educated borrowers, mortgage brokers are reporting, but is also prolonging the process. Since Jan. 1, lenders and brokers have been required by law to have borrowers sign simplified Good Faith Estimate forms, which are intended to eliminate confusion by combining fees into one origination charge before underwriting can begin. Now, borrowers are asking more questions and taking a more active role in negotiating their way through the borrowing process, according to Richard Martin, a senior vice president with New York-based DE Capital Mortgage. Martin says inquiries about Good Faith Estimate forms, since they’ve taken on a simpler format, have increased by 50 percent. But the new requirements are also tacking on time and money for borrowers. The Department of Housing and Urban Development had estimated that the new disclosure rules will save customers $700 on average, but Martin estimates that they’ve added roughly five days to the process, which means some borrowers may have to pay extra fees to guarantee an interest rate. [NYT]