Typically asked questions:
What is a forensic loan audit?
What is the benefit to have one of these audits done?
What could happen to your mortgage company if found in violation of law or a congressional act?
How do you present the audit findings to your mortgage company?
A Forensic loan audit is an audit that finds violations of State law or Federal congressional acts which are supervisory authorities that monitor for violations of said acts all which have different directives.
Such as
RESPA-“Real Estate Settlement Procedures Act
TILA-“Truth-in-Lending Act
HOPEA-Home Owner and Equity Protection Act
HMDA- Home Mortgage Disclosure Act
GLB-Gramm-Leach-Billey Act
FTC-Federal Trade Commission Act
FHA-Fair Housing ACT
ECOA-Equal Credit Opportunity Act
FACTA-Fair and Accurate Reporting Act
FCRA-Fair Credit Reporting Act
Violations can happen from the start of the loan process a good example is when the application is taking from the borrower and the Good Faith Estimate is not delivered with in three business days of the application “this is the rule if the application is taken by phone” if the application is taking in person the Loan Originator must disclose the good faith right then and their. Not supplying a GFE in the time outlined in the directive is a RESPA violation and could result in a very bad day for your mortgage company. Most violation can be up to $10,000 dollars Plus possible criminal prosecution if the criminal activity is found.
The audit documents include your original mortgage loan transcripts from the initial Application all the way to the mortgage contract prepared by your lender which you execute and sign at the title company.
Approximately 75-83% of U.S. residential mortgage loan documents and transactions have Federal, state and local violations of law, errors and omissions.
Forensic Loan audits use legal compliance partners; Audits use a technology and online legal mortgage compliance engine “special software.
Forensic loan audits are best performed by professional organization with knowledge to conduct such an audit usually special software is used to evaluate the original loan documentation the audit is best conducted by a mortgage attorney. Top notch Loan Modification Companies have retained mortgage attorneys to supply them with forenizic loan audits when necessary.
With all that said Mortgage companies take Forensic Loan audits very seriously and forward them directly to their legal departments to get an Idea of the severity of the violation or violation. “Some can be considerably worse than others such as ethnic or racial discrimination this is a direct violation of HOPEA “Home Owner and Equity Protection Act.
Your audit can provide an objective basis for equitable discussions and facilitate your loan modification negotiations. In other words your mortgage company could be facing penalties sanctions, associated with the violations plus a big law suit from you.
How do you present your findings to your mortgage company?
Well this is a complicated question and actually has many correct answers. Much will depend on the severity of the violation and what you are trying to achieve in your negation with your mortgage company.
My personal opinion is that you use the audit lightly at first since the negotiator can be easily freaked out and clam up.
Example:
My Client is very concerned about the violations that the forensic audit has found in the report and would like the Mortgage company and the negoator handling his or hers loan modification to understand that they just want a payment they can afford with a fixed rate that’s all nothing more nothing less, they want to be able to pay as agreed if granted a loan restructuring. They would hope there is a way to get their payment to
$XXXXX
Here is an example of the basic Forensic loan audit for your review. I hope this article has answered some questions. You can reach me anytime toll free at 1-866-266-2151 or Bill@UShousingrelief.org I will more than happy help in anyway possible.
Sincerely,
Adam Durham
Senior Loan Modification Specialist
US Housing Relief LLC
