Unformatted text preview: certified appraiser. The broker is exposed to considerable liability if, as an arranger of the loan, he or she is also appraising the property.
A subsequent foreclosure and resale at a significantly lower figure than the appraisal might result in a lawsuit. The lender could claim either negligence or fraud. However, if the arranger of the loan does make the appraisal, it should be well documented to stand a possible challenge by expert witnesses. Mortgage Loan Disclosure Statement – Copies of the Lender and Purchaser Mortgage Loan Disclosure Statement should be kept on file indicating, by the signatures of the parties, that the statements were received. Mortgage Loan Disclosure Statement will be discussed later in Chapter 11. Servicing Agreement – If the arranger of credit (Mortgage Loan Broker) will not service the loan, the file should have signed documentation that the lender was so informed. Most arrangers of mortgages do not service loans that they arrange. Dynasty School (www.dynastySchool.com) 6-9 REAL ESTATE FINANCE
A few do so. These are usually multi–office loan brokers who have a significant volume and are able to treat loan servicing as a separate profit base. If the hard money arranger will be servicing the loan, then the file should include a copy of the loan servicing agreement. Example:
A prospective borrower entered into a written contract with a broker, where the broker was to obtain a $950,000 loan for the permanent financing of a shopping center. The plaintiff broker obtained a loan commitment for the loan. However, the commitment introduced a condition not contemplated by the loan procurement agreement. As a condition of the loan, the lender required the limited partners to sign personally on the note and trust deed. This would override their exemption from liability, which was one of the purposes of being a limited partner. The loan was refused on these conditions and the broker sued for a commission since a loan had been found. The trial court held that the plaintiff had not performed as the offered loan had a condition that was reason...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10