Definition of good faith

1. unsecured loan made on the basis of the borrower's reputation in the community, called a character loan.
2. in bad debt collection, an agreement by the lender to modify efforts to recover the amount owed if the borrower makes certain payments or delivers collateral.
3. legal requirement that a lender extend credit in the belief that the borrower will repay the debt according to the terms of the loan agreement.
4. a lender's reasonable estimate of mortgage closing costs, which must be listed in a closing statement, as required by banking regulation.
5. token sum of money given to indicate interest in fulfillment of a contract, called good faith money. In a real estate transaction, it is known as earnest money.

total absence of intention to seek unfair advantage or to defraud another party; honest intention to fulfill one's obligations; observance of reasonable standards of fair dealing.

a concept of honesty.

Example: Abel pays $1,000 to Baker as a good faith deposit on land Baker offers for sale. Baker doesn't own the land and doesn't plan to buy it, so his acceptance of the deposit was not in good faith.