By Phil Harrison

Mortgage brokers are generally aware that being in a financial-related business makes them more vulnerable to lawsuits than many other professions. That’s because when an alleged errant issue affects someone’s pocketbook, the dispute often prompts a phone call to an attorney.

Belonging to the Georgia Association of Mortgage Brokers is advantageous in today’s litigious climate because membership demonstrates sincerity in sound professionalism. GAMB further helps members reduce the odds of legal problems through regulatory alerts and through education programs that emphasize ethical and efficient practice procedures.

Yet even with reasonable care, potential for substantial losses through litigation exists. For example, here is a partial list of business exposures for which mortgage brokers most frequently face litigation, according to the claims reports of a prominent errors and omissions insurer:

Recognizing two years ago that mortgage brokers need adequate insurance protection, the GAMB Board approved for IPR, Inc. to offer a GAMB-customized professional liability insurance program (also known as errors and omissions or E&O insurance) to GAMB Members. This program gives members the opportunity to obtain safeguard coverage at a competitive premium from a high-rated insurer and also . Further, the GAMB customized program has additional features not included in standard policies.

This coverage is not only a prudent response in light of Georgia’s Fair Lending Act, but also fills the liability gap not covered by general liability insurance. Maintaining professional liability insurance can also help establish credibility with potential clients, because prospective customers generally have a greater respect for and confidence in a mortgage broker firm that has errors and omissions coverage.