Errors and Omissions
The Errors and Omissions document is loan document that allows the lender to return to the borrowers to correct mistakes in the package.
Occasionally, the lender will miss having a document in the package. Or the package does not print entirely. Sometimes the notary will miss a signature or initial. This require the borrower to assist the lender in having the documents corrected.
In effect, this is a money saving tool for the lender. It helps insure a smooth closing process with minimal disruption.
This document is usually limited in terms of time and scope. In most cases, the time is limited to thirty (30) days after the date of closing. It is also limited in scope to the documents that are in the loan closing package.
This document cannot be used to change the terms of the agreement. The terms have to remain the same.
In many cases, the document will provide a provision that assures the loan package is marketable. This means that the lender is able to sell the package in the open market place to third parties.
If additional documentation is needed to make the package marketable, the borrower agrees to sign the necessary documents.
This rarely happens (I have never seen it in more than 20 years of practicing law) but it could. The market may require an additional document that was not created prior to the closing. In other words, a new document may be needed that was not created prior to closing.
Again, rarely happens, but it could and the lender has the right to protect itself in this situation.
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