Is a bank liable for, or would they be cited for, errors in a loan file that they have purchased on the secondary market? For example, the servicing disclosure was not signed at the time of application or there is an error on a GFE or HUD, or even an error on the TIL.

The general rule is you buy it, you own it. Unless, of course, your contract has an indemnity clause in it for serious flaws such as ROR or Reg Z violations.

...and just try to get an originating lender to perform under the terms of the indemnity they are so quick to sign when they have the loans and you have the check.

...and then there's the problem of a broken chain of ownership. If you bought the loan from someone who bought the loan from someone who...(you get the picture), and ANY of your upstream participants goes out of business nobody's going to volunteer to eat the problem and the offending party's cashed out and gone to Disney World.

Moral of this story: There's no substitute for hard-nosed due diligence BEFORE getting into bed with any other lender PLUS ongoing due diligence as the deals come in.