We all know how litigation crazed our country has become in the last several decades.  This is especially the case with the general public suing professionals in fields such as medicine, construction and of course real estate.  This is why it is essential for people who desire to become a mortgage broker to receive a well rounded education from a mortgage broker school.  By doing so future mortgage brokers can better service future clients and at the same time protect themselves from legal liabilities.  Here are a few of the legal traps mortgage brokers can encounter and some tips on avoiding them.

Misrepresentation:  This is the most common kind of the lawsuit brought against brokers.  Misrepresentations come in three types: innocent, negligent, and fraudulent and include problems clients find with a house’s foundation and structural integrity as well as other features.  Other common accusations related to charges of misrepresentation include renovating without a permit, environmental and title problems.  To help avoid this charge use seller disclosure forms and do not speak in absolutes or guarantees when discusses a property.  Mortgage brokers should also consider purchasing errors & omissions (E&O) insurance.

Fair housing violations:  Although Fair Housing Violations account for a relatively small amount of litigation, the laws in this area are complex and judgments can be quite high.  Avoid being charged with these kinds of violation by refusing to do business with clients who desire to discriminate against particular groups.  Also, train and take mortgage broker classes in order to learn the fair housing laws.

False advertising:  These lawsuits commonly include things such as affinity programs, “For Sale” signs and Internet advertising.  Make sure that all the advertising you do on a property complies with state license law as well as the REALTOR® Code of Ethics Licensee laws.  Also include accurate photos and descriptions with every ad related to the property you are trying to sell.

Environmental issues:  Be aware of common environmental issues involved in selling a property such as asbestos content, lead paint levels and ground water contamination.  Not knowing about these issues can come back to bite you in the form of litigation.  Again, know and take classes that educate you on these issues and how they affect you as a mortgage broker.

Unfortunately, lawsuits are not uncommon in this profession however with proper education and training you can minimize the chances that you will be a defendant in court.  Having the proper training and education ensures that your clients and the general public will be well served and that you can enjoy a lucrative career that is relatively hassle free.