How's this for a major blunder?
A borrower is on maternity leave and while there were possibly real problems with the file, the underwriter sent the LO an email stating she was turning the file down because "the borrower is on maternity leave and too many moms don't go back to work after having a baby."
The LO sent the email to the Realtor and borrower and added "the underwriter likes everything else about the file."
Bad to worse!
The borrower has filed a discrimination complaint based on family status with HUD. HUD has "suggested" to the lender they should pay the borrower back for the lost Earnest Money, appraisal fees, survey, inspection, and repair fees that have already been paid. In addition, they are also "suggesting" that the lender pay for 6 months of the borrowers new apartment lease and the Realtor's commissions because the borrower had already given notice at her current apartment.
I'm sure the owner and officers of this company know the correct way this should have been handled. This is a great example of not knowing what you don't know that you don't know that goes on in your company. My experience tells me it is doubtful this is not the first time this has happened and might be happening on regular basis.
So, what is the biggest problem you see that happened in this situation? What policy could have been put in place to have kept this from happening? What checks and balances should the company have to know about these type problems before they become repetitive?
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Update: I've seen the official HUD complaint including the HUD response. The mortgage company involved has chosen to stand by its decision. The complaint is filed based upon sexual and disability discrimination.
The disability falls under the American Family Disabilities act.
One person asked me today "what should the underwriter have done to turn this loan down?"
The answer is "she shouldn't have."
Follow up....
I just got another email about this blunder and it's sad how paranoid the industry is about "investor guidelines and overlays."
If the borrower qualifies. She qualifies. And a lender can't have any of their infamous overlays in a case such as this.
Come on! She either qualifies or she doesn't based upon the merits of the file and an underwriter can't set and speculate whether or not the borrower will turn to work or not.
so you are saying the underwriter should not have denied this loan, and go ahead and gave it a clear to close?
I agree, the underwriter doesn't have the right to decide what the future holds.
I wonder if they finally got a loan through another lender?
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