Good Faith Estimate (GFE) was a form that the Real Estate Settlement Procedures Act required lenders of home loans to provide to borrowers within three days of a loan application. A GFE includes estimates of all the fees or “closing costs” of a mortgage. The borrower is not required to pay any of these costs or go through with the loan by getting a GFE. A GFE sets the estimate in a standard format so that a borrower can accurately compare the costs of different mortgages. One key aspect to the GFE is that it limits the amount the fees can be changed from the estimate after taking the mortgage. Since 2015, lenders for most mortgages provide a loan estimate form or a Truth-in-Lending disclosure depending on the type of mortgage instead of a GFE. Whether you receive one of the updated forms or a GFE, they fill the same general role of providing borrowers a dependable way to know exactly the fees and terms they are agreeing to.
See also: First American Financial Corp. v. Edwards; 12 U.S. Code § 2607
[Last updated in January of 2022 by the Wex Definitions Team]
