Can I Benefit From A Forensic Loan Audit Even If I Am Current On My Mortgage?
Can I Benefit From A Forensic Loan Audit Even If I Am Current On My Mortgage?
by Arnold Stadneck
Of the 2 or more million mortgages that were funded between 2000-2007, many of these loans were funded unlawfully. During that period, bankers, lenders, mortgage brokers, appraisers and others in the industry enjoyed very prosperous times. Many of these people performed their jobs responsibly, while others performed their duties illegally. Prosecutions are continuing as these predatory lending violators are being brought to trial.
Your loan may contain violations and may be unlawful. And if that is the case you may be entitled to substantial damages whether you are current on your mortgage or if you are facing foreclosure. The rules are the same. The law does not differentiate. It is estimated that over 85% of mortgages funded during this time period contain some type of lending violation. The purpose of a forensic loan audit is to look for violations of federal and state lending practices.
What exactly is a forensic loan audit? A forensic loan audit is the comprehensive review of all documentation, legal paperwork, transaction data, and other evidence pertaining to a real estate loan that has already been funded. A Forensic Loan Audit identifies any illegalities performed by the lender, their broker, or other parties in conjunction with the loan. During the audit process, a professional should review your loan to ensure that it meets all legal requirements that were in effect at the time the loan was funded.
Why is this audit so important? This simple and straightforward answer is, loans must be legal to remain enforceable by the lender. Loan violations are serious offenses of federal laws and lenders may face stiff fines and penalties for breaking the laws. For the most part, lenders and banks are firms run by reasonable business people. Begrudgingly, they understand the financial mess they were instrumental in creating, and want to avoid any possible large fines or being faced with expensive litigation.
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.
Assuming there are violations on my mortgage loan, then what happens? If the forensic loan audit uncovers evidence of deceptive lending practices or mortgage fraud, you probably have a very good case with more than enough leverage to negotiate a reasonable settlement with your lender. Without leverage you are at the mercy of the lender who will either stall you off or wear you down to the point of accepting a gratuitous offer.
The penalties for failure to comply with the Truth In Lending Act and other sections of the regulations as they apply to mortgage lending, can be substantial. A creditor who violates the disclosure requirements may be sued for twice the amount of the total finance charge on the loan. In the case of a home mortgage, this can be a very significant amount.
Your home and your family’s welfare are too important to leave to chance. A forensic loan audit may uncover certain irregularities which in turn will give your legal negotiators the ammunition they need to work out a favorable loan modification program for you. At the end of this process; homeowners who have been the victims of predatory lenders, can rectify a great deal of the damage done to them. Including, resetting the terms of the loan to a lower interest rate, eliminating any back due amounts, restoring their credit history and saving their home.
Arnold Stadneck, a retired freelance artist, recently underwent his own forensic loan audit. When he refinanced his sprawling lakefront home in 2003 he had no idea that he would be one of thousands of borrowers, caught up in the financial turmoil, applying for a loan modification within the next five years.
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