Which statement is true about the Good Faith Estimate requirement?

The Good Faith Estimate (GFE) requirement is designed to provide transparency to borrowers regarding the costs associated with their loans. The requirement mandates that lenders must provide the GFE within three business days after a borrower submits a loan application. This timeline is crucial because it allows borrowers to have a clearer understanding of the expected closing costs and fees associated with the loan, helping them to make informed decisions and compare different mortgage offers effectively.

This provision plays a central role in consumer protection laws by ensuring that borrowers are not blindsided by unexpected costs at closing. Understanding this timeline is especially important for mortgage loan officers, as adhering to it is part of regulatory compliance, ultimately fostering trust and accountability in the lending process.

The other options do not correctly reflect the requirements established by regulations surrounding the Good Faith Estimate. For instance, the requirement does not stipulate that it must be sent five days before closing, nor is it limited to only conventional loans or optional for small loan amounts. These misinterpretations highlight the importance of understanding the GFE's proper timing and applicability in the loan origination process.