Ensuring Accuracy and Compliance: An Attorney’s Checklist for Mortgage Loan Documentation

In the realm of real estate financing, meticulous documentation is essential to ensure transparency, accuracy, and legal compliance throughout the mortgage loan process. Whether representing lenders, borrowers, or other stakeholders, attorneys play a critical role in overseeing the preparation and review of mortgage loan documentation. Here’s an essential checklist from an attorney’s perspective to ensure thoroughness and compliance in mortgage loan documentation.

1. Loan Application and Disclosures: Begin by reviewing the loan application and all associated disclosures provided by the borrower. Ensure that the application accurately reflects the borrower’s financial information and that all required disclosures, such as Truth in Lending Act (TILA) disclosures and Good Faith Estimate (GFE), are complete and compliant with regulatory requirements.
2. Promissory Note: Verify the terms of the promissory note, including the principal amount, interest rate, repayment schedule, and any provisions for prepayment or default. Ensure that the note is properly executed by both parties and contains all necessary signatures and acknowledgments.
3. Mortgage or Deed of Trust: Review the mortgage or deed of trust document, which serves as security for the loan. Confirm that the document accurately describes the property being mortgaged, outlines the rights and responsibilities of the borrower and lender, and complies with state-specific requirements for mortgage instruments.
4. Title Insurance and Title Report: Obtain a title insurance policy and review the accompanying title report to identify any liens, encumbrances, or title defects that may affect the property’s ownership. Ensure that the title insurance policy provides adequate coverage to protect the lender’s interest in the property.
5. Insurance Documentation: Verify that the borrower has obtained adequate property insurance coverage, including hazard insurance and, if applicable, flood insurance or mortgage insurance. Confirm that the insurance policies meet the lender’s requirements and provide sufficient protection against potential losses.
6. Closing Disclosure or HUD-1 Settlement Statement: Review the closing disclosure or HUD-1 settlement statement to ensure that all closing costs and fees are accurately disclosed and comply with regulatory requirements. Confirm that the borrower has received the final disclosure in a timely manner before closing.
7. Escrow Agreement (if applicable): If the lender requires an escrow account for property taxes and insurance payments, review the escrow agreement to ensure that the terms are clearly defined and comply with applicable laws and regulations.
8. Compliance Documentation: Document compliance with all applicable laws and regulations, including federal lending regulations such as the Real Estate Settlement Procedures Act (RESPA), TILA, and the Home Mortgage Disclosure Act (HMDA), as well as state-specific requirements for mortgage lending.
9. Closing Documents and Recording: Ensure that all closing documents are properly executed by the parties involved and that the mortgage or deed of trust is recorded in the appropriate county or jurisdiction to perfect the lender’s security interest in the property.
10. Post-Closing Review: Conduct a post-closing review to confirm that all required documentation has been completed and retained according to regulatory requirements. Address any discrepancies or deficiencies promptly to mitigate potential legal risks.

By following this comprehensive checklist, attorneys can help ensure that mortgage loan documentation is accurate, thorough, and compliant with applicable laws and regulations. This meticulous approach not only protects the interests of lenders and borrowers but also promotes transparency and integrity in real estate financing transactions.