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.

Potential Errors

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.

Additional Coverages

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

         Compliance procedures

         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.