In a speech to the National Association of Mortgage Brokers (NAMB) FHA Director, David Stevens, said HUD had to take a “paternalistic” approach to regulating the mortgage industry and ensuring consumer protection. This was in response to a suggestion from a California Mortgage Broker that with a few adjustments, the new Good Faith Estimate (GFE) could be a much more effective tool. Stevens reiterated the standard HUD line that the GFE went through years of testing and is here to stay. He neglected to tell the audience that during the testing and public comment period for the form, industry groups expressed major concerns with the GFE and predicted the challenges it has produced. While few would argue that we have to improve consumer protection, many agree that the new GFE is poor example of protection.

The GFE has become a confusing maze of fees that often do not reflect the negotiated terms of the sales contract and does not provide basic information, such as total monthly payment or cash needed to close.

HUD has a fundamental disconnect with their approach to consumer protection. Director Stevens was confident that given time the new GFE would provide clarity for consumers. “We can train consumers to read the lines of the form and make good borrowing decisions.” As long as HUD takes responsibility for “training “ consumers , they will never ensure protection. Rather than train them to read a form, we must educate consumers on the process and allow them to decide for themselves what loan product is best suited for their needs.