It’s always amazing the amount of errors we see in the mortgage process. Even with the technology we have actively deployed and at our disposal today, it still comes down to competent humans doing a good job. So to aid our mortgage friends here is a couple of common errors we see.
#1 – Double check everything. Just because you typed it, or “saw it in the system” doesn’t mean it saved, or that related systems or documents have been updated. For instance, you updated fees and now you are creating a new GFE for your client. When you created the GFE, did you read it? I mean really read it. Not double checking documents for errors created from poor data entry can cause many problems. Just today on a closing the borrower signed documents and the docs went back to the lender and the wire shows up at escrow and it’s short? Why, well when the lender issued a COC (Change of Circumstance) they did not carry over the increased broker fees. Sounds like a windfall for the borrower except brokers or lenders are not allowed to lower fees arbitrarily, and now we have a loan that can’t be sold and can’t be disbursed. Now loan documents will need to be redrawn and the whole closing process completed again. time is money and this delay caused a loss for all parties.
#2 – Even with all the training and licensing required today, we still see a lack of knowledge in the sales ranks for lenders and brokers. The disclosure process is technical, its detailed, and if done wrong, can cause a loan to be cancelled. It’s no joke. Leaving a title fee off the initial Good Faith Estimate and going to far in the process will require the lender or broker to “eat” the fee since a compliance violation would be created if the lender or broker tried to raise the fees. Even if they are normal and customary fees and even if the mistake was honest. Try explaining to the judge, “Your honor, it was an honest mistake that we forgot to add the $800 title insurance fee.
#3 – Pricing, Borrower Paid or Lender Paid and the Anti Steering Disclosure. No doubt that having new rules every year is causing major pains for the leaders of today’s mortgage companies. What remains to be seen are the plethora of future lawsuits sure to be created from incorrect disclosure. Sure today’s loans are a great risk for the investor and we have certainly cleaned up the messes that created the subprime crisis. But I can assure you there will be a gaggle of attorneys that realize that today’s disclosure process and borrower ignorance will create a entirely new vertical in the legal profession. One primary form I think will be exhibit “A”, will be the Anti Steering disclosure, mainly because the disclosure forms we see from clients are completed incorrectly. The Anti Steering is supposed to display alternative offers for the clients review so they know what they are getting and what other options are available with lower fees and a higher rate or vice versa. But many times this form is left blank. Again, a loan processing system is only as good as the data that comes out from it. It is critical that forms are properly completed or the lawman may come knocking on your door soon!