To verify mortgage loan documents, lenders must cross-check loan applications with supporting evidence, confirm borrower income and assets through tax returns and bank statements, validate property details via appraisals and title reports, and ensure compliance with regulations like the Truth in Lending Act (TILA) and Home Mortgage Disclosure Act (HMDA). Reviewers should also reconcile the Closing Disclosure (CD) with the Initial Loan Estimate (ILE) to prevent discrepancies and audit third-party files for accuracy.

This process is critical to mitigating fraud, ensuring regulatory adherence, and protecting borrower rights. According to the Consumer Financial Protection Bureau (CFPB), 1 in 5 mortgage loans in 2022 contained errors that required corrective actions, highlighting the need for rigorous verification. The Federal Housing Finance Agency (FHFA) reports that unresolved discrepancies in loan documents can lead to costly rework, averaging $3,200 per case in 2023. Compliance with TILA-RESPA Integrated Disclosure (TRID) rules, which mandate consistent documentation, reduced post-closing disputes by 18% between 2021 and 2023, per the CFPB. Additionally, the 2023 Mortgage Bankers Association (MBA) study found that 34% of lenders using automated verification tools reduced approval errors by 27%. These steps safeguard both lender reputation and borrower trust, ensuring alignment with the U.S. Department of Housing and Urban Development’s (HUD) 2023 goal of reducing mortgage defaults by 15%.