Aiding lenders and Realtors navigate new federal loan requirements for consumers was the goal when Tom Richardson decided he needed to create an online tool to generate binding mortgage cost estimates.

But his new proprietary system - called GFE QuickQuote and the first of its kind in Michigan - also could help Ann Arbor-based Liberty Title grow its mortgage loan settlement business as the real estate and lending industries adjust to new national disclosure rules.

At issue are new guidelines issued by the U.S. Department of Housing and Urban Development in the wake of the national housing meltdown.

The guidelines - called “confusing” by Richardson and accompanied by a 51-page explanation from HUD - became mandatory on Jan. 1.

Now, anyone seeking a mortgage is required to receive a “Good Faith Estimate” of closing costs, based on six pieces of information that they provide to a lender.

That estimate - called a GFE - has long been part of the process.

The change, Richardson said, is that the lender is now legally bound to the cited fees, so any change must fit limited criteria.

The result, he said, is that “it no longer is just an estimate. It is a document that binds the lender to certain aspects of the loan.”

However, he said, many of those aspects historically have involved pricing variables for title companies - such as how much a company would charge at settlement for fees like copying documents or wiring funds.

The issue facing his company and others that process real estate settlements, Richardson said, is that now federal requirements to standardize how a consumer can evaluate fees are forcing an industry to set general rates for services that have been customized to each situation.

“What’s going to happen on our end is we see costs going up,” Richardson said. “We used to have a menu of charges … (HUD) forced me to come up with a single quote.”

But even as Liberty Title and others in the industry committed to working within those guidelines, getting the information to make the GFE remains an issue in the industry.

That’s why Richardson decided to design the GFE QuickQuote program, which was launched on the Liberty Title web site early this month.

“I sat down and figured out as best I could what lenders needed to have to give an accurate GFE within a tight timeframe,” he said.

He said the key was structuring fees so that they’d fit any scenario, then fitting them into an algorithm. He hired Ann Arbor-based MedHub to aid with the Web design and programming, since the firm previously had built the company’s Web site.

The process took about 2.5 weeks, Richardson said.

And the result is a program that requires a login, basic information on the property and the borrower’s name, and six additional pieces of information. Within moments, the user receives figures for both title service and insurance, recording charges, transfer tax and property tax.

“It’s very easy to use,” Richardson said.

The simplicity of the program belies the complexity of the change, he said. Only limited changes are allowed in the GFEs now, including “acts of God,” and lenders who issue wrong or misleading forms will have to pay the difference.

About 30 lenders have registered on the Liberty Title site within its first week, Richardson said, and he’s been authorized to teach about the changes for Realtor continuing education classes.

He also will be detailing the application to national title executives at a conference this month.

Richardson said the necessity of working with the new regulations resulted in a new product that adds value for his company.

“We think every title company in America should have an application like this,” he said.

Paula Gardner is Business Director at AnnArbor.com. She can be reached by email or followed on Twitter.