Correspondent vs Broker

Posted By: peony

Correspondent vs Broker - 10/01/15 06:21 PM

In the CFPB's Compliance Guide of TRID, it states that if the mortgage broker receives the application, the creditor is responsible for any errors. What if we are a correspondent? (Taking application, closing in our name then directly sell loan) Who would be responsible for any errors?

Posted By: peony

Re: Correspondent vs Broker - 10/02/15 12:30 PM

Posted By: MonicaMc

Re: Correspondent vs Broker - 08/21/18 03:31 PM

Bringing this old thread/question back from the dead.

We are an investor and do underwriting for Correspondent banks. They prepare all docs and work with the borrower. We underwriter. They close. And we purchase.

We haven't done a whole lot of these files lately, so I have basically the same question. I have taken a quick glance at the LE that the Correspondent Bank sent to the borrower. I have seen at least 4 errors (time zones, fee names, expiration date, etc). If we UW and purchase, will the errors be on us? There isn't anything we can cure at this point.
Posted By: rlcarey

Re: Correspondent vs Broker - 08/21/18 03:44 PM

You need to read 15 U.S. Code § 1641 - Liability of assignees
Posted By: MonicaMc

Re: Correspondent vs Broker - 08/21/18 03:56 PM

Thanks Randy!
So just to confirm that I am reading this right, as long as there are no underlying issues, we can hold the Correspondent bank accountable for any errors if something happens with the loan in the future?

(e) Liability of assignee for consumer credit transactions secured by real property
(1) In general Except as otherwise specifically provided in this subchapter, any civil action against a creditor for a violation of this subchapter, and any proceeding under section 1607 of this title against a creditor, with respect to a consumer credit transaction secured by real property may be maintained against any assignee of such creditor only if—
(A) the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement provided in connection with such transaction pursuant to this subchapter; and
(B) the assignment to the assignee was voluntary.

(2) Violation apparent on the face of the disclosure described For the purpose of this section, a violation is apparent on the face of the disclosure statement if—
(A) the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement; or
(B) the disclosure statement does not use the terms or format required to be used by this subchapter.
Posted By: Truffle Royale

Re: Correspondent vs Broker - 08/21/18 04:06 PM

In a similar position here and while the Reg is helpful, you probably have a contract with the correspondent that should address this issue and be much more binding. Our contracts with the correspondent bank outlines exactly who is responsible for what and what the consequences are for non-compliance up to and including buying back the loan.
Posted By: rlcarey

Re: Correspondent vs Broker - 08/21/18 04:52 PM

What TR said ^^^^

What the law says is that the borrower can sue you as the assignee. How you divvy that up between you and your correspondent is a matter of your purchase contract.