Form 1050: Common mistakes and helpful tips
It may not seem like the Form 1050 is all that complicated. But beware! It’s easy to make mistakes, especially when you have a pipeline full of closings or you’re down a staff member or training a new hire.
Here are the errors we often see in our loan reviews.
Lender FIRS number is missing.
Not all your employees will know this number. Make sure you have a common resource list for your staff to refer to.
Disbursement Type is often left blank or improperly checked.
If you’re not fully funding the loan at closing, then First Disbursement should be completed. If you are fully funding at closing, then choose Full Disbursement.
Authorized Amount Remaining is left blank on partially funded loans.
In their rush to complete the form, the preparer sometimes fills in only the Amount Disbursed column.
Injection Source is left blank.
This should be completed based on the documentation received for source injection and the amount injected. Remember: SBA requires Borrower injection to be spent before or at the time the loan is funded.
While SBA allows for a signature addendum (as long as it carries an Addendum Heading and the name of Document it’s tied to), they require at least one Borrower signature on the first page. Any additional signatures can be on the addendum.
This is a recent “hot button” for OCRM on any SBA document with an addendum.
“Second set of eyes” should be a procedural habit.
Oftentimes, and I can speak to this personally, if the document is reviewed by the person who prepared it, errors can be (will be!) missed. A second reviewer will dot those i’s and cross those t’s, ensuring nothing is left out or incorrect.
SBA pipelines pull your staff in different directions depending upon the economy. You’re either so heavily laden with workouts and liquidation that the closing process gets stale – or you’re overwhelmed with closings.
Either way, stay attentive to your processes so you can be sure your documents will standto an SBA review.
Want some help with this? We can review your process, help train your people, and more. Request a free consultation and let’s explore what would be most helpful for you!