How Does A Forensic Loan Audit Differ From A Loan Modification?
Posted by: Guest Author / Category: MortgageMany of the mortgages funded between 2002-2007 contained irregularities and many were unlawful. During that period, underwriting guidelines took a back seat as lenders in their greed made loans that under normal circumstances should never have been approved.
Your loan may be unlawful, and you may be entitled to substantial damages whether or not you are currently in foreclosure. A forensic loan audit is designed to look for violations of federal and state lending practices. Well over 83% of the forensic audits performed to date reveal major TILA (Truth in Lending Act), RESPA (Real Estate Settlement Procedures Act), Predatory Lending, and Real Estate/Mortgage Fraud violations.
A Forensic Loan Audit is made up of a thorough review of your most recent mortgage loan package. All documents are examined, particularly the Note, HUD (Closing Statement), GFE (Good Faith Estimate) and a wide assortment of other legal documents making up your loan package. The purpose of the audit is to identify any illegalities performed by the lender, their broker, or other parties to the loan. During the audit process, a professional should review your loan to make sure that it meets all legal steps in effect at the time the loan was funded.
Why is this important? Loans must be legal to remain enforceable by the lender. Loan violations are serious offenses of Federal Consumer Protection Law and lenders may face huge fines and serious legal consequences for breaking these laws. Financial institutions are typically run by rational business people. Lenders understand the financial ramifications of their mistakes and usually want to avoid expensive litigation or the risk of being charged with large fines. When the audit team commences the negotiating process, the onus begins to shift and the lenders can often be persuaded to mend situations more easily with homeowners.
How does the average home owner benefit? Violations are like bullets being loaded into a gun, used by the audit team to argue your case with the lender. As a rule, the more violations, and the more severe those violations are, the better your chances of obtaining a favorable settlement is going to be. This settlement may include punitive damages, attorney fees, lower monthly payments, a principal reduction, a delay or prevention of a foreclosure sale and more.
There is a saying with universal application that states that a person who elects to represent himself has a fool for a client. This is not the time or the place to try to test out your negotiating skills. There is far too much at stake. Your best course of action is to hire an attorney who is skilled in mortgage lending and real estate law. And particularly one who knows and understand the forensic audit principals. He or she will determine the proper course of action. If your loan is found to contain irregularities and is considered unlawful you may be entitled to compensation and other awards. At worst, you can be assured of an attractive loan modification on terms more to your liking.
What is predatory lending? Dishonest behavior by many lenders, bankers, brokers and their sales force has caused the recent collapse of the financial markets. Examples of loans that may be considered predatory include pay option arms, stated income loans, bait and switch loans, elder abuse and other similar type loans where unscrupulous mortgage lenders and/or banks took unfair advantage of the borrowers.
Summary. A forensic loan audit may uncover certain irregularities which in turn will give your legal team the upper hand when it comes to dealing with your lender. Banks would rather negotiate than litigate. At the end of this process many homeowners who have been the victims of predatory lenders are able to rectify a great deal of their problems, including the realization of lower interest rates, reduced principal balances, foregoing past due balances and most importantly keeping their home and their sanity.
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Tags: adjustable loans, forensic loan audit, home loan modification, home loans, home mortgages, home owners, loan modification, Loans, Mortgage, mortgages, pay option arms, stated income loans