Sales Contract

The auditors (in house) say we need a sales contract for an application that the customer canceled - went with another lender. Auditors say that because the application looks like an purchase transaction, they say I need to produce the sales contract (I don't have one).

What is the law about this? I need to be right in order to go on with selling loans. Thanks, Confused LO with previous auditing experienced.

If the loan was funded, I would see the need for the additional documentation, and I'm sure that the underwriter would have had a stipulation that the contract be produced as part of the approval process . The loan never made it to closing, and what you have is a request that would be inconvenient to produce.

I can understand why, in a complete loan package, there would be the need to see the contract (compare to appraisal, down payment, transfer of title, etc.), but I would have the IA document why they need it in a loan that never made it to closing.

I agree with Jax - where is the control issue? What law or regulation is being violated? In an originated loan, having a copy of the sales contract permits the bank to verify that it has followed its underwriting guidelines. But if the loan is not made because the customers withdrew their credit request, then the underwriting process was never completed in the first place. There is no need to verify a process that was not performed.

Ask the auditors to explain why the doocumentation is needed on an incomplete transaction.

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Ask the auditors to explain why the doocumentation is needed on an incomplete transaction.

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"Because I have been at this job for months now and the workpapers say right here that I should ask for this." Sorry, venting. Been there and had that done to me. It is like asking a denied applicant for more information to complete the file. Yeah, that is always a good one.