The process of lending money for a mortgage is complicated, with room for human error along every step of the way. Errors and omissions, or mortgage E&O, is designed to prevent a simple mistake from ballooning into an unrecoverable financial loss.
When clients believe that your simple mistake was caused by negligence, E&O insurance helps pay the high price of defending your business and your reputation in court. Here are some potential mistakes that can end up as lawsuits:
• Bad advice given to a loan applicant
• Wrongful Truth in Lending Act disclosures
• Alleged discrimination
• Dispute with a mortgage broker
• Misreading of a flood map
• Failure to administer correct property taxes
Errors and omissions insurance pays for resulting legal fees that could otherwise exhaust your funds.
Depending on your firm’s specialization and the type of clients you serve, extensions are available to provide extra coverage. You can often choose from the following additional policies:
• Real estate tax liability
• Life and disability
• Failure to determine flood zone liability
• Mobile homes
• California earthquake
Remember, no two E&O policies are identical. Be sure to discuss your business situation with your insurance agent so that he or she can craft a policy to cover your unique risks.