One aspect of the new good faith estimate disclosure that may be adding to closing costs is that it requires each closing cost component to be listed separately.
The separate listing may come at the literal expense of being able to offer an "all inclusive" discount for all closing costs combined, according to David Leoncavallo, president of GFEazy, a company that works with a partner to help mortgage production firms produce accurate closing cost estimates required on certain parts of the GFE.
This is a concern specifically for block/section 6 on the GFE form, which requires for example, costs for a pest inspection and home inspection to be listed separately. "A lot of times home inspectors will charge hardly anything for a pest inspection," he said. Because the GFE form requires costs of providers suggested by the lender—should the borrowers choose to use them—to be estimated separately before closing and for the lender to essentially guarantee those estimates within a 10% tolerance, it is challenging to state a bundled price.
Regulators have acknowledged that to some extent the increased work the industry has to do for the GFE does create some additional costs and they do allow those costs to be passed on to the borrower within reason, Leoncavallo said.
