I got a referral the other day, someone who was moving from Waco to Austin, and we talked for a while when he asked for my good faith estimate and rate quote. I said "sure" and fired one off.

A couple of days later the potential client left me a message on my voicemail, saying he was having a hard time comparing the different good faith estimates he'd gotten from a couple of other lenders and would I call him and help clear things up.

So I called and we chatted and I could tell he was really frustrated looking at the different estimates, all in different formats. "Why isn't there some universal form that all lenders have to fill out instead of them all being different?" he asked.

"They are all the same, they just look different." I said.

"Every potential charge you see on each of those estimates has a number assigned to it, does it not?"

"Yes." he answered.

"That's how these estimates are put together, it's just that different loan processing software can have a different look or feel but they all have to conform to the same standard. Line item 801 is for an origination charge, item 802 is the points, 803 is for the appraisal and so on." I explained. Then added, "Pay no attention to any other numbers except the "800" series and it'll clear everything else up."

And I'm right. Loan officers can intentionally or mistakenly mislead a consumer when completing a good faith estimate request by low-balling certain non-lender charges such as attorney fees or title insurance or adding additional fees that won't appear on a final settlement statement.

When reviewing a good faith estimate one can't simply ignore all those charges for Recording fees or Escrow charges. But you should.

That's because your lender has nothing to do with your escrow charge or your document stamp, yet still is required to disclose those fees to you upon application or at your request. That's why I told my potential client to forget about every other section and concentrate only on the "800" section. That's reserved for lender charges. That's where you compare one lender to the next.

Some lenders have a lot of little fees and some don't. Some have processing charges while other lenders do not. Ditto for tax service or administration or commitment or whatever.

The final trick in evaluating a good faith estimate is to also pay attention to "missing" fees or the names given to a particular lender charge. If a charge is not there it doesn't mean you're getting a discount on anything or having a fee waived. If one lender charges an administrative fee that doesn't mean every lender does. It's simply a junk fee.

Pay no attention to what the fees are called but instead pay attention to what those fees add up to. A loan officer can tell you, "Hey, I'm waiving our $500 processing fee and our $300 commitment fee for you!" but that doesn't mean he's going to be $800 less than everyone else. He's simply "charging" then "waiving" a fee.

Good faith estimates can be confusing when comparing one lender to the next one but make your job easier and only compare the lender fees; everyone else's charges will fall where they may. Take it easy on yourself.

Published: May 11, 2007

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.