Will this ever happen again? Despite what you hear on the news or what our politicians are saying, reality is this is never going to happen again regardless of whether the government does anything or not. People tend to remember really big mistakes.
There is nothing worse than loosing out on a home because you could not provide a strong pre-approval letter. Listing agents are starting to demand not only strong pre-approval letters that specifically mention what steps the lender has taken, but proof of funds and even Fannie Mae approval printouts!
At the end of the day all the brokers did was match-up the borrower with the loan product they wanted. During that time borrowers didn't care about the loans they got, investors didn't care if the loan file was a complete work of fiction, and rating companies just cashed the checks. Everybody got what they wanted, but nobody understood what they got.
OK, so now that the new Good Faith Estimate (GFE) is "in use" those damn lenders are going to have to give us accurate estimates, right? Well… er… no.
This is a very interesting question - especially in light of how important everybody from idiotic politicians to equally uninformed journalists seem to think it is. Personally I've never met ANYONE who actually knows what it is outside the lending industry, and surprisingly most people IN the lending industry don't really understand it. So what [...]