Which document replaces the Good Faith Estimate?

The document that replaces the Good Faith Estimate is the Loan Estimate. The Loan Estimate is a standardized form created by the Consumer Financial Protection Bureau (CFPB) that provides borrowers with important information about the terms of a loan for which they are applying. It is designed to streamline the mortgage process by offering clear and concise information about interest rates, monthly payments, and estimated closing costs, allowing borrowers to compare different loan offers effectively.

The Loan Estimate must be provided to borrowers within three business days of receiving their loan application, which empowers them to make informed decisions early in the mortgage process. This form is a critical component of the TILA-RESPA Integrated Disclosure rule, aimed at improving the transparency of the lending process and protecting consumers.

In contrast to other documents such as the Closing Disclosure, which details the final terms of the loan before closing, or the Mortgage Agreement, which outlines the legal obligations between the borrower and lender, the Loan Estimate specifically focuses on providing a clear overview of the loan's estimated costs. The Final Accounting Statement is not relevant in this context because it typically refers to the financial settlement at the closing of the loan rather than the preliminary disclosure provided to borrowers at the outset.