Errors & Omissions
Professional
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Complete the attached application and supplement below.
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Mortgage Brokers Claims Examples
Example: Sara has finally saved enough money to put a down payment on a house. She goes to QRS Loans and meets with Len to discuss mortgage options. After a few hours, she finally agrees to a loan at 5.2% APR. Len tells her he will be in touch with her in a few days to finalize the paperwork, however he assured her that he was able to lock in the rate. Two weeks go by and Sara does not hear anything from Len. She calls QRS and finds that Len quit his position the same day Sara met with him. Unfortunately, he did not handle any of the work on his desk before he left. Sara is told she will have to come back in and find another loan. She does, and this time the best rate she is offered is 7.5%. Sara sues QRS for the $25,000 difference in projected payments over the life of the loan due to the difference in the loan rates.
Example: Rick and Lisa are buying
a house together. They visit Harry’s Home Loans and meet with Harry about a mortgage.
Harry finds them a good rate and everyone is happy. A year goes by, and Rick
and Lisa are now both unemployed and unable to pay their mortgage. They receive
a notice in the mail from the bank advising them the bank is foreclosing on
their house if they do not pay $15,000 in back payments. In a last ditch effort
to save their home, Rick and Lisa sue Harry’s Home Loans for the $15,000
for allegedly not disclosing all of the terms of the loan. Although Harry
is found to have committed no wrongdoing, it still costs him $10,000
to defend himself.
Example: Charlie goes to NOP Mortgage
to find a loan. NOP is able to find a loan for Charlie with BDE Bank. After
a few months, Charlie leaves town and defaults on his loan. It is later found
that Charlie falsified income information on his loan application. BDE sue NOP
for negligence for not having quality control procedures in place to detect
fraudulent applications. They also demand NOP Mortgage repurchase the loan.
The suit costs NOP $35,000 in defense costs alone.
Example: Ray goes to Webster’s Mortgage
Hut in order to find a loan for his small business. He meets with Webster himself
and learns that Webster’s does not place commercial loans. However, for
a $100 referral fee, Webster refers Ray to another loan broker that could
help him. Unfortunately for Ray, when he visits the other broker he learns
that he does not qualify for a loan. To make matters worse, Webster will
not refund his referral fee. Ray sues Webster for referring him to a
mortgage broker that could not help him. Even though Webster has no legal
obligation to make sure Ray is able to secure a loan, it still costs
him $15,000 in defense costs.
Example: Ron is looking to buy
his first house. Ron’s friend John is also in the market for a house, and decides
to accompany Ron to TUV Home Loans. They apply for loans, and are both granted
loans with Tom’s Bank. Ron later learns that John’s loan is almost
1% less than his, even though both Ron and John have similar financial
history. This 1% translates into $15,000. Ron sues TUV Home Loans
for the $15,000 difference for material misrepresentation.