Good Faith Estimate (GFE) Flashcards
an addon to the previous section there will be times when you give a client a GFE rather than a TIL. This section will test your knowledge on why this GFE is given over a TIL, what it outlines to clients, why they need it and when they will receive it during the lending application.
A lot of loan applicants will not encounter a GFE document, this is because only certain mortgages need these specially catered documents. So, what is GFE exactly?
A. A mortgage estimate for terminally ill applicants.
B. A mortgage estimate for reverse mortgages.
C. A mortgage estimate for seniors (60 and older).
D. A mortgage estimate for disabled applicants.
E. B & C.
Correct answer: E
E is correct, as a GFE is a mortgage loan estimate provided to reverse mortgage applicants and those sixty years or older. This may not be to buy a home but also for seniors to take out equity from their home to pay for house repairs and other expenses.
So, if the LE for standard loans isn’t offered as part of the GFE, what else is not part of a GFE?
A. Home equity.
B. Reverse mortgage.
C. Mortgage loan terms.
D. Fees outside the GFE’s credit report fee must be paid before a client
receives it.
Correct answer: D
D is correct, as a GFE can only charge a credit report fee for the GFE, but any other fees would be against the law. The GFE provides information about the mortgage loan terms, the implications of taking out a reverse mortgage, and home equity, with a cost breakdown to allow shopping around to find the right lender.
When does a client receive a GFE?
A. At the start of the application.
B. Three days from first contact, C. Just before the closing.
D. Before the underwriting process.
E. A & B.
Why is a GFE perfect for clients looking at different lenders?
A. It creates a fairer market.
B. It gives clients shopping rights.
C. Lenders will provide upfront costs.
D. No unforeseen costs.
E. All of the above
Correct answer: E
E is correct because, like with LE and TIL statements, the GFE statement gives seniors seeking reverse mortgages the power to choose the lender that best suits their needs and budget. It also ensures prices remain competitive, open, and fair for all clients seeking a mortgage.
A lender has a lot of regulations about how they can and cannot charge a client for their services and time. The same is said for the documents they provide their clients, so is it true that a client doesn’t
need to pay for a GFE?
A. Yes.
B. No.
C. It depends on the lender.
Correct answer: C
C is correct because there is not cemented rule that says that a lender cannot charge an applicant for their time producing a GFE document. So, it depends on the lender whether a client may be charged for producing the quote, even if they don’t in the end pick his lender to help them with their home loan.
The TIL is regulated by the TILA as an essential document in any regular mortgage application. So, what act regulates a GFE in a reverse mortgage application?
A. RESPA
B. Regulation X
C. SAFE Act
D. HMDA
E. A & B
Correct answer: E
E is correct because a GFE is a regulated document under the RESPA law
where lenders must provide this document for all reverse mortgages
(Regulation X). With this being said, when consumers apply for a loan,
lenders must supply a TIL (regular mortgage) or GFE (reverse mortgage)
within three working days of application
