Mortgage broker insurance requirements are in place in the event the broker issued. A buyer may decide to sue the lender, the broker or both for errors or negligence. A lender may not be liable for the broker’s alleged misconduct leaving the mortgage broker on the hook. Here are some common reasons claims are filed.
Acting as the broker for the lender and the buyer can lead to a disputed transaction. Wearing multiple hats can open up the broker for vicarious liability. Situations, where the broker acts as both for the same transaction, can increase the broker’s liability.
A buyer who is approved for a loan they cannot reasonably afford can put the mortgage broker in a tough spot. Approving these loans may be deemed as misconduct. Avoid approving loans that the buyer may have trouble repaying to avoid additional liability.
A mortgage broker who fails to properly communicate accurate information can mislead the buyer. Failure to order an appraisal after stating that one has been ordered can result in a lawsuit for broker misconduct.
Protecting your business starts with meeting the mortgage broker insurance requirements. Mistakes happen, but you don’t have to handle the case alone. Insurance can step in to help cover court costs.