WASHINGTON - A single sheet of paper has the real estate industry in an uproar.
Every time a potential home buyer applies for a mortgage, he or she receives a document known as the Good Faith Estimate, which spells out the thousands of dollars in fees the buyer is expected to pay when the deal closes.
The problem is the document is confusing, lenders use different versions, and there is plenty of room for abuse, if not outright fraud.
"The unnecessary complexity of mortgages has actually greatly contributed to our housing crisis," says Brian Montgomery, assistant secretary for the Department of Housing and Urban Development. "We must do something to make mortgages more understandable and the process much more transparent."
HUD has proposed a comprehensive overhaul of the process of applying for a mortgage. And the agency predicts that simplifying the Good Faith Estimate to help borrowers better understand the terms of their loan could save home buyers $670 on every mortgage loan on average, or $1.2 billion a year.
But any changes to the stack of paperwork that consumers must sign before buying a house will have a big impact on thousands of real estate agents, mortgage brokers, banks, and title companies, and they all want a say in how the documents look.
The deadline for comment was yesterday, and the real estate industry flooded HUD's in-box with cries that the changes would be complicated and costly, and don't necessarily make the process easier for consumers to understand.