Responsibilities that Mortgage Lenders Should Know: Part I

Responsibilities Mortgage Lending

Mortgage Lenders have unrelenting responsibilities to keep track of and obligations that must be met in order to be in compliance with regulations. To do business transparently and with integrity, mortgage lenders have to fully understand the responsibilities associated with their role and meet them with expertise in order to be successful in their endeavors.

The Loan Origination Process

Mortgage lenders must work to create a streamlined and transparent loan origination process. According to industry experts, lenders should embrace technology that fosters “integrations with leading loan origination, processing, lead management and CRM software providers [to] enable seamless functionality at the desktop and help to streamline workflow, improve transparency for any loan scenario, and drive higher quality for loans locked.” (1) When the process is right, there is greater accuracy and less stress for the mortgage lender who knows that the process works and can be relied upon to nurture compliance and support the lender’s goals.

Appraisal Responsibilities

Under new regulations, mortgage lenders have some added responsibilities. Industry exports report that, “HUD is now authorized to execute an Indemnification Agreement on an
FHA insured loan transaction if they conclude that the Lender Insurance mortgagee knew or should have known of serious and material violations of HUD appraisal requirements.” (2) This places considerable onus on the lender that cannot simply avow that is ‘didn’t know’ of any violations at the time of the appraisal.

In essence, the mortgage lender must ensure that the property has no deficiencies that could harm the occupants of the structure in accordance with HUD standards and requirements. Lenders must also ensure that the property in question meets all of HUD’s appraisal requirements.

While mortgage lenders scramble to ramp up their process to protect themselves in this regard, they must also contend with Fannie Mae who may also request a repurchase if their requirements have not been met–even on a loan that has been performing!

These, of course, are just a few responsibilities mortgage lenders face in today’s lending arena. There are many more, so ensuring that these responsibilities and obligations are met is just the beginning.


1. LoanLogics

2. FNL Responsibilities for Lenders WP 2014

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