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The Evolution of the Good Faith Estimate

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

A good faith estimate (GFE) is a comparison of mortgage offers provided by lenders or brokers to a consumer. It was recently replaced by the loan estimate—a similar concept with a few small differences. 

What Is a Good Faith Estimate Designed to Do?

The GFE’s purpose was to present mortgage shoppers with all the details they need to know about their mortgage options to help them make well-informed decisions. This transparency ensures consumers are aware of all the costs associated with the mortgage—including fees, APR and other expenses.

Borrowers would receive a GFE three business days after submitting their mortgage application, and after thorough review, would then select which mortgage option they would like to move forward with. 

Are Good Faith Estimates Still Used?

The term “good faith estimate” is not used by lenders anymore, but the concept remains prevalent. In 2015, the GFE was replaced by the loan estimate. Anyone who purchased a home after October 3, 2015, received a loan estimate rather than a GFE. 

In October of 2015, the good faith estimate was replaced by the loan estimate.

If you applied for a reverse mortgage, HELOC, a mortgage through an assistance program or a manufactured loan not secured by real estate, you will not receive a loan estimate. Instead, you will receive a Truth-in-Lending disclosure. 

The purposes of a GFE, a loan estimate and a Truth-in-Lending disclosure are largely the same: providing transparency to borrowers. The main difference—and benefit—of a loan estimate is that there’s more regulation by the Consumer Financial Protection Bureau (CFPB). Since the GFE was not standardized through regulations, they were sometimes difficult to decipher, especially for first-time homebuyers. Conversely, each loan estimate must contain the exact same information in a standardized way, which we’ll cover below. 

What Appears on a Loan Estimate?

According to the CFPB, a complete, compliant loan estimate should include the length of the loan term, the purpose of the loan, the product (fixed versus adjustable interest rate, for example), the loan type (conventional, FHA, VA or other), the loan ID number and indication of an interest rate lock. Additionally, the loan estimate will include the following:

  • Loan terms: A summary of the total loan amount, interest rate, monthly principal and interest and penalties, and whether these amounts can increase after closing.
  • Projected payments: A summary of monthly principal, interest, mortgage insurance, taxes and insurance. Broken down by years 1–7 and 8–30 for a 30-year mortgage.
  • Costs at closing: Estimated closing costs and the total estimated cash needed to close, which includes the down payment and any credits.
  • Loan costs: Origination charges—which is broken down by 0.25% of the loan amount, application fees and underwriting fees—and other fees.
  • Other costs: Taxes, government fees, prepaid homeowners insurance, interest and prepaid property, escrow payment at closing and title policy.
  • Comparisons: Metrics you can use to compare your loan to others. Includes the total principal, interest, mortgage insurance and loan costs you will have paid after five years.
  • Other considerations: Information about appraisal, assumption, homeowner’s insurance, late payment fees, refinancing and servicing.
  • Confirmation of receipt: A line at the end of the statement that confirms you have received the form. This does not legally bind you to accept the loan.

Your loan estimate will also include your personal information, including your full name, income, address and Social Security number. Make sure to double-check all of this information for errors, as they could cause potential problems later in the process.

To better understand your loan estimate, explore the CFPB’s interactive guide.

Closing Disclosure

For first-time homebuyers in particular, it’s important to understand the timeline of events so that you can be prepared for your home buying process and have all the information and necessary documents at hand.

Closing Disclosure Timeline

Lenders are required to send you a loan estimate form no more than three business days after receiving your application. Finally, at least three business days prior to loan consummation—when you are contractually obligated to the loan—you will receive a closing disclosure.

Lenders are required to send you a loan estimate no more than three days after receiving your application and a closing disclosure at least three days prior to loan consummation.

What Is the Purpose of a Closing Disclosure?

The purpose of a closing disclosure is to assign “tolerance levels” to fees listed in the loan estimate form. This means that fees cannot increase over their tolerance level unless a specific triggering event occurs. There are three different tolerance levels:

  • Zero percent tolerance: Fees in this category cannot increase from what is listed on the loan estimate. These fees are typically those paid to a creditor, broker or affiliate, such as origination fees.
  • 10 percent cumulative tolerance: Fees in this category are added together, and the sum of these fees are not to increase by more than 10 percent of the amount listed in the loan estimate. Fees include recording fees and third-party service fees.
  • No tolerance or unlimited tolerance: Fees in this category have no limits at all, and can increase by any amount, as long as they are disclosed “in good faith,” using the best information available. These are usually fees lenders have little to no control over.

Remember not to confuse “zero percent tolerance” with “no tolerance,” as they are quite different. Zero percent tolerance fees cannot increase, while no tolerance fees can increase by any amount as long as it is considered “in good faith.”

Does a Loan Estimate Affect My Credit?

The act of applying for a mortgage may temporarily cause your credit score to dip, as it requires a hard inquiry by lenders. However, you may shop around for different mortgages from different lenders to get multiple preapprovals and loan estimates. As long as you do this all within a 45-day window, these separate credit checks will be recorded on your credit report as one single hard inquiry.

This is because lenders realize that you are only going to buy one home, so they categorize all of the actions you take under one umbrella of applying for a mortgage. Note that you may want to consider the 45-day rule loosely. Prioritize finding the best mortgage deal possible. Even if this means processing a hard inquiry outside of the 45-day window for a better deal, you’ll likely end up saving more money in the long run.

To learn more about what affects your credit and how to work toward improving your credit profile, contact our team at Lexington Law.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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Enough Is Never Enough: Americans Weigh In on How to Help Those Struggling Financially During Pandemic

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Welcome to the new normal.

Shelter-in-place orders brought on by the pandemic caused unemployment to skyrocket as businesses struggled to cope.

According to Pew Research Center, the unemployment rate shot up nearly nine percentage points in three months, rising from 3.8 percent in February to 13.0 percent in May. This three-month spike was greater than the rise seen in the entire two years of the Great Recession, from late 2007 to early 2010.

The U.S. government issued stimulus checks to families to help keep the economy alive and supplement lost income as an addition to unemployment assistance—but was the one-time effort enough?

We surveyed 3,000 Americans to get a better idea of their thoughts on how to aid those who have lost income due to the pandemic. Here, we’ll dive into the results.

Key Findings

  • Nearly two-thirds of respondents agreed with the statement that “more needs to be done to help those who have lost income due to the pandemic.”
  • Despite this, 67 percent wouldn’t consider donating a second stimulus check (were it to be issued) to help those who have lost income to the pandemic.
  • Instead, respondents said a second stimulus check would most likely go toward bills, savings, mortgages and credit card debt.

Americans in Agreement: Let’s Help Those Who Have Lost Income

When asked if they agreed with the statement that “more needs to be done to help those who have lost income due to the pandemic,” 68 percent responded “yes.” Women were slightly more likely to respond “yes” at 70 percent, compared to 66 percent of men.

Does more need to be done to help those who have lost income due to the pandemic? Lexington Law survey results: Yes: 67%. No: 32%. Other: 1%.

But when it comes to financial aid for millions of Americans, the solution isn’t always so simple. How can a nation ensure its citizens are adequately taken care of in a way that makes fiscal sense? Does the burden fall on individuals to make personal contributions?

To find out, we asked if respondents would be willing to donate a second stimulus check—should one be issued—to those who have lost income due to the pandemic.

Donating Second Stimulus Checks Not the Solution

Despite the majority of respondents agreeing that Americans need more aid during this time, 67 percent would not consider donating a potential second stimulus check to those who have lost income.

This is likely because the pandemic has resulted in many Americans becoming financially strapped already, whether due to unemployment, furloughs, reduced wages or other factors. 

Despite the fact that 68% of respondents agree that more needs to be done to help those who have lost income due to the pandemic, 67% would be unwilling to donate a second stimulus check.

It’s worth noting that while Americans aren’t prepared to donate their second stimulus check, our survey didn’t confirm whether they would be willing to donate at all. Perhaps smaller, more bite-sized donations would better suit peoples’ current financial capabilities.

So How Would Respondents Spend a Second Stimulus Check?

When it comes to spending a second stimulus check, respondents were much more likely to use their check for more pressing matters. Utilities and bills were the most popular choices, selected by 30 percent of respondents.

Interestingly, 20 percent of respondents said they would use the check to pay down credit card debt. This is perhaps part of a larger trend of shrinking consumer debt during the pandemic. CNN reported that consumer debt shrank by approximately $100 billion from February to July in 2020. With consumers having less discretionary income or just wanting to tighten up their finances during this crisis, it makes sense that they would be swiping their cards less frequently.

According to Experian, the decrease in consumer debt has had a positive impact on credit health. The average VantageScore has increased by five points and credit utilization has decreased from 30 percent to 25 percent, falling into the recommended utilization range.

How would Americans use a second stimulus check? Utilities and bills: 30%. Saving or investment: 26%. Rent or mortgage: 21%. Paying down credit cards: 20%. Recreation and hobbies: 9%. Charitable donations: 8%.

For the latest updates on the status of the second round of stimulus checks, visit CNET’s page.

Take Care of Yourself First—Physically and Financially

Despite uncertain times, the fact that consumer debt and credit scores have improved is an encouraging sign to anyone looking to improve their financial health. When you’re revisiting your budget during these times, remember to prioritize making on-time debt payments to keep your credit healthy.

If you’ve had a more difficult time making payments in recent months, or if your credit score has seen a temporary dip, don’t give up. There’s still potential for another stimulus check to be approved, and no matter what happens, you might be able to take steps now to improve your credit score.

It’s also important to continue to monitor your credit report for false or inaccurate items. When coupled with financial hardship, these can wreak unnecessary havoc on your credit score. We can help with that.

Methodology

This study was conducted for Lexington Law using Google Consumer Surveys and interpreted by Siege Media. The sample consisted of no less than 1,000 completed responses per question. Post-stratification weighting has been applied to ensure an accurate and reliable representation of the total population. This survey was conducted in September 2020.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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What Is Piggybacking Credit? – Lexington Law

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Piggybacking credit, otherwise known as becoming an authorized user, allows you to be added to another’s credit card account in order to improve your credit standing. There are a number of reasons why you may need more positive exposure on your credit report—you could be looking to buy a car, get a loan or secure the best rates on a new line of credit, to name a few. 

There are some risks associated with piggybacking credit, so it should only be used as a temporary solution.

So what is piggybacking credit, really? Below we’ve outlined everything you need to know about this credit-boosting method.

How Piggybacking Credit Works 

If someone with good credit adds you as an authorized user to one of their credit cards, that credit card account and payment history become part of your own credit report. Piggybacking credit is not the same thing as becoming a joint account holder.

The difference is that the authorized user is not responsible for the charges made on the credit card, and a joint account holder is. 

When piggybacking credit, the authorized user gets the cardholder's full account history reflected on their own credit report, which can have a positive effect on their score.

Simply put, the authorized user gets the cardholder’s full account history reflected on their own credit report, which can have a positive effect on their score.

However, if you piggyback credit with someone who does not have a positive credit history (frequent late payments, low score, multiple hard inquiries, etc.) or even credit history at all, you run the risk of getting points shaved from your own credit score. 

While piggybacking credit may be beneficial for the authorized user, on the other hand, the primary cardholder who has added the authorized user could see their credit score lower if the authorized user has a poor credit history. 

About 1 in 4 consumers first acquire their credit history from an account for which others were also responsible.

Ways to Piggyback Credit 

To piggyback credit, you can get a close family member, spouse or friend to share their credit rating and history with you.

Person-to-Person:

This method of piggybacking involves a family member, friend or significant other with a good credit score adding you as an authorized user, in order to share their credit reputation with you. To do this, the cardholder contacts their credit card issuer and adds you as an authorized user. You then will be able to choose to get a card for the account or not. 

If you end up getting access to your own card on the account, you may be offered privileges—like being able to make charges and payments. However, it’s likely you won’t be able to increase the line of credit or request lower rates. This method is commonly used by teenagers who are added to their parents’ credit card account as authorized users, for example.

This can be a great way to get the boost of credit you need before applying for your own credit cards, loans or anything else that may require a higher credit score to secure the best offers and interest rates. 

For-Profit: 

Some people—who may not have a close relative or friend they can piggyback credit with on a person-to-person basis—also choose to rent a position as an authorized user on a stranger’s account for a fee.

In this scenario, you can turn to tradeline credit repair companies that will match you with a cardholder with great credit, for a fee. With this method, the cardholder ends up getting a percentage of the fee that you pay, and you will not receive an actual credit card or obtain card privileges. 

Keep in mind that for-profit piggybacking is a short-term solution and you’ll only be an authorized user for a limited time. Once your term ends, the account will then be removed from your credit report, which puts your credit scores at risk of dropping again. If you do consider this approach, be very careful—some people offer for-profit credit piggybacking as a scheme. 

If you do decide to pursue this method, we recommend that you do so through trustworthy sources.

Is Piggybacking Credit Legal?

Yes, piggybacking credit is legal, however it is not a well-known credit-boosting method, as many people are unaware that it’s an option. Piggybacking became a method to boost credit after The Equal Credit Opportunity Act was enacted in 1974; which made it illegal for a creditor to discriminate against any applicant. 

Piggybacking became a method to boost credit after The Equal Opportunity Act was enacted in 1974, allowing previously disadvantaged groups to gain their own credit histories.

Piggybacking credit was used as a strategy designed to help combat the obstacles women faced prior to The Equal Credit Opportunity Act, allowing them to get their own credit cards or establish independent credit histories after they were added as an authorized user to their husbands’ accounts.  

However, since then, people have discovered loopholes to use The Equal Credit Opportunity Act to help them establish their own credit, or even rent it to others. When adding an authorized user to an account, cardholders do not need to indicate whether that new user is a spouse of the cardholder or not.

This means that an authorized user can be a friend, family member or stranger when it comes to for-profit credit repair organizations. 

Does Piggybacking Help or Hurt Your Credit? 

While piggybacking credit may be beneficial for some, we recommend that you approach it cautiously. It’s important to keep in mind that not all account holders or credit lenders can be helpful, or ensure that you get your intended credit results.

If you become an authorized user and your relationship suffers, or the primary cardholder ends up getting into financial trouble or starts missing payments, your credit history and score may also suffer. Piggybacking credit requires a great deal of trust between the account owner and the authorized user. 

How to Improve Your Credit Without Piggybacking 

You may consider piggybacking credit as a way to boost your credit reputation, but remember that it’s not a sustainable long-term solution. The best way to boost your credit score is to establish good financial and credit habits. Below are a few other ways to build your credit on your own and keep it healthy in the long run. 

  • Pay down debt
  • Lower your credit utilization ratio
  • Dispute errors on your credit report
  • Increase your credit limit
  • Limit hard inquiries on your credit report
  • Make payments on time

Whether you’re the cardholder or the authorized user, it’s important to know both the pros and cons of piggybacking credit. If you’re building credit for the first time, consider taking your own steps to build your credit reputation before piggybacking off of someone else’s credit, as it can be risky. If you have any questions about piggybacking, or want to learn about alternative ways to build your credit, consider signing up for credit repair services online to help you reach your financial goals.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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How Much Does It Cost to File for Bankruptcy?

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Filing for bankruptcy is a process that can take more time and cost more money for a variety of reasons. There are some standard costs involved in all cases—less than $400 in court fees for filing paperwork and other surcharges—but this doesn’t account for attorney fees and payment plans.

In most cases, Americans pay between $400 to $4,000 in bankruptcy filing and attorney fees.

Bankruptcy Filing Fees

There are slightly different fees depending on whether you’re filing for a Chapter 7 or Chapter 13 bankruptcy. In both cases, the total cost in filing fees and surcharges is under $400 for the majority of people.

  • Chapter 7 filing costs: $245 filing fee, $75 administrative fee and $15 trustee surcharge
  • Chapter 13 filing costs: $235 filing fee and $75 administrative fee

Petitioners in both cases must also finish two mandatory bankruptcy education courses from approved credit counseling agencies. The federal government sets maximum allowable costs, and as such, the total cost to complete the courses is from $0 to $100.

Small additional costs may be added—$0.50 per page for reproducing documents, $11 for document certification and $22 for exemplification—among other miscellaneous fees that could become significant in complicated and prolonged court cases.

Attorney Fees

As mentioned previously, attorney fees are difficult to estimate in general and can be wildly different based on the location and specific elements of each bankruptcy case. Basically, if it’s a complicated situation, it will take longer to resolve and will incur more fees.

You’re not required to work with an attorney, which means you can file a bankruptcy petition on your own, but that leaves you responsible for all interactions with the court. The likelihood of you being successful is much higher when you’re represented by professionals who have experience handling these matters.

The specific attorney fees in your area are on the public record—made available by the government via PACER for $0.10 per page of information—which means you can find reliable costs at a local level.

Some estimates are provided below using data outlined in the Consumer Bankruptcy Fee Study produced by the University of Maine School of Law.

If You’re Filing Chapter 7

The national mean for Chapter 7 attorney fees is $968 in no-asset cases and $1,072 in asset cases. When comparing state by state, the difference in average cost can be over 200 percent. Averages range from a low of $692 in Idaho to a high of $1,530 in Arizona.

If You’re Filing Chapter 13

The national mean for Chapter 13 attorney fees is $2,564. The difference in cost from state to state can be even greater than in Chapter 7, with an increase of over 300% from lowest to highest cost. The most affordable state is North Dakota, where the mean attorney fee is $1,560 for Chapter 13 cases, and Maine is the least affordable at $4,950.

Each court has its own limits when it comes to no-look fees (also known as “presumptively reasonable fees”). These refer to the fact that if someone’s Chapter 13 filing fees are below a set amount (like, say, $4,500), the court will consider the fees reasonable without further review.

What Can Make a Bankruptcy Filing More Expensive?

Other than the filing fees, attorney fees and court costs, there are several issues that can add to the complexity and total cost of filing for bankruptcy.

  • Non-dischargeable debts, such as the majority of owed taxes, debt incurred due to deliberate injury or damage to people or property, child support, alimony and debts that were not disclosed in bankruptcy filing. These are debts that can’t be removed (discharged) via the bankruptcy process
  • Higher-than-average income based on your state and the number of people in the household
  • Previous bankruptcy filings within the last seven or 10 years that appear on your credit report
  • Multiple current filings, such as an ongoing personal bankruptcy case occurring alongside a business bankruptcy
  • Complications due to income streams and/or creditors—having more creditors generally increases the amount of time needed, as does the presence of multiple and/or complex income streams
  • Ongoing fraud cases, investigations or allegations
  • Payment plans and other arrangements made between attorney and client

Is There Any Way to Reduce Costs?

Most of the costs associated with bankruptcy are either set in stone, such as the filing fees and court costs, or predetermined by your specific situation and unable to be changed. However, there are a few circumstances that may help lower your costs.

Anyone over the age of 65 and people with disabilities, as well as the unemployed and those on a low income, may qualify for help at the local level via city and county programs. They may also receive lower fee agreements and more favorable terms on payment plans from individual attorneys.

Options such as this are dependent on location and whether the attorney in question is willing to accept it.

Theoretically, the biggest cost-saver would be to represent yourself, which would remove the attorney fees and keep your total costs fairly low. However, in reality, representing yourself in a bankruptcy or any other case is risky and can create higher costs and headaches that would’ve been avoided by paying for professional help.

The Bottom Line

As detailed above, the costs associated with Chapter 7 and 13 bankruptcy cases can vary by 300% or more and are dependent on many factors that are out of your control. It could cost a few hundred dollars, or many thousands of dollars, and the cost of a typical case is somewhere around $2,500.

It’s best to consult with a professional, even when it brings additional costs at such an unfortunate time. Bankruptcy attorneys are experts in the field and can give advice on other issues, such as the differences between foreclosure and bankruptcy.

After the dust has settled in the initial process of filing and satisfying the bankruptcy process, it’s important to get back on track and rebuild your credit and become eligible for all of the benefits it can bring. The bankruptcy will appear on your credit report for up to 10 years, but it’s never too early to start improving.


Reviewed by Vince R. Mayr, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Vince has considerable expertise in the field of bankruptcy law. He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

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