The Mortgage Company Professional Liability (MCPL)

The Mortgage Company Professional Liability (MCPL) policy protects against possible losses from suits mainly in the area of loan origination. This can include the loan application process, loan processing, underwriting, closing, Secondary Market sales, servicing, and loan foreclosure. The Stateside Professional Liability Policy covers a firm’s legal liability for wrongful acts made in providing professional services performed as a mortgage banker or mortgage broker.

Certain Third party Liability suits which may be covered could arise from the following areas:

• Secondary market sales (optional)
• Servicing (optional)
• Loan origination
• Loan processing
• Underwriting
• Closing to mortgagors
• ARM loans
• Certain disputes over the loan application

Practical examples of some claims that our underwriters have defended or paid a loss for include claims involving allegations such as:

• Discounted Loan Loss resulting from a loan sale after correcting a covered error for a loan (optional coverage and the broker must request this coverage)
• Equity Stripping Allegations
• Allegations of negligence in making a loan
• Allegations of unauthorized activities with regards to a loan
• Failure to supervise employees
• Wrongfully Distributing Funds
• Allegations of Usury Rates

The policy does contain certain limitations that may limit coverage depending on the specifics of a professional liability claim and of course the policy wording and endorsements determines coverage. Nothing here is meant to convey that the above claim examples or suits are automatically covered, but they are intended to demonstrate some claims we have seen.

CLAIM DETERMINATION...Any claim is subject to the actual policy wording/endorsements and the coverage for a claim shall be determined using the policy wording.

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