Most common Loan Officer Errors

This is good information for both borrowers and Loan Officers.

According to one of our most popular lenders, the largest instances of recent errors were:

  • Debts/liabilities, followed by income calculations
  • Debts omitted incorrectly (to be paid at closing but not on the CD, over 10 payments remaining, or the debt is more than 5% of the income on an FHA loan)
  • Undisclosed debts on pay stubs and bank statements not addressed
  • The PITI on REO’s were not fully documented or calculated (taxes, insurance, etc.)
  • Investment (or 2nd home) transactions where the borrower rents – the primary residence rental liability was not documented
  • The Income worksheet was not completed fully/correctly and an incorrect income was used (YTD, bi-weekly vs. bi-monthly pay, etc.)
  • Self-Employed income not calculated correctly – meals/entertainment not addressed, K1 income used to qualify, but no distributions were reflected on the K1 and a liquidity test was not performed, etc.
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