If you’ve bought a home before 2015, you received a Good Faith Estimate (GFE). The mortgage industry has since moved to the standardized Loan Estimate form. Here’s what changed and why it matters.
The Old System: Good Faith Estimate
Before October 3, 2015, borrowers received a Good Faith Estimate within 3 business days of application. The form was not standardized — different lenders formatted it differently, making comparison difficult.
The HUD-1 Settlement Statement (received at closing) was often dramatically different from the GFE, catching borrowers off guard with fees that changed significantly.
The New System: Loan Estimate and Closing Disclosure
The Consumer Financial Protection Bureau (CFPB) replaced the GFE with the Loan Estimate (LE) — a standardized 3-page form every lender must use.
Key improvements:
- Standardized format makes comparison shopping easy
- Clear indication of which fees can change before closing and by how much
- APR and total interest payable calculated for you
The HUD-1 was replaced by the Closing Disclosure (CD), which must be provided at least 3 business days before closing.
Fee Tolerance Rules (Important)
The CFPB established “tolerance limits” on how much fees can change between the Loan Estimate and the Closing Disclosure:
Zero tolerance (cannot change at all):
- Origination charges
- Transfer taxes (if the lender knew the amount)
10% tolerance (can change by no more than 10%):
- Appraisal
- Title insurance (required)
- Government recording fees
Can change without limit:
- Prepaid items (interest, insurance premiums)
- Initial escrow deposits
- Services you can shop for (if you choose a different provider)
What to Do If a Fee Changes
If a fee that was in a zero or 10% tolerance category increases significantly at closing, the lender must absorb the difference. You have the right to question and challenge fees that violate tolerance rules.