Responsibilities that Mortgage Lenders Should Know: Part II

Mortgage Lenders Responsabilities

Mortgage lenders face immense responsibilities when they lend. Non-compliance with requirements and standards is out of the question. Therefore, lenders must be vigilant about meeting their obligations with accuracy. To that end, lenders must become adept at understanding their responsibilities so they can install reliable processes for granting mortgage loans.

Emphasis on Quality Control

To say that the mortgage industry is filled with a minutia of details would be an understatement. Yet missing one detail can lead to serious breaches. To ensure that the lending agency is meeting all requirements, it must create a program of quality control that relies on best practices. Installing excellent quality control measures isn’t simply a best practice; it is a full-fledged responsibility that responsible lenders must embrace.

As experts suggest, “When a business is responsible for handling the finances of their customers, such as those who handle mortgages, it is important to have quality assurance policies in place.” (1)

Appraisal Requirements

Mortgage lenders must ensure that appraisal requirements are met during the loan process. This involves learning about common deficiencies and taking steps to prevent them from occurring during the loan process. For instance, some common deficiencies include instances where the property provided no access “for the appraiser to inspect the crawl space and/or attic area” (2) or the distance between the property’s well and its septic system was below the minimum requirement.

Other deficiencies the lender must guard against include insufficient zoning compliance, the property is located in a hazardous flood area, a considerable amount of repairs are required for the property to meet minimum requirements, and the existence of adverse conditions (goodness knows how many there may be) that must be adequately mitigated.

In short, the lender has no shortage of responsibilities to ensure that their loan process is up to par and that it supports the lender’s ability to meet all of its responsibilities. As strict requirements are enforced, lenders have to be more detail-oriented than ever. A loan process that is continuously monitored for quality is essential for lending in this climate today.

Sources:
1. Examiner.com, “What Are Quality Assurance Audits for Mortgage Loans?

2. LoanLogics, “FNL Responsibilities for Lenders WP 2014

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