Over a period of five years or more, primarily during the real estate boom years of 2002-2007 over 2 million mortgage loans were funded. During that period, when real estate prices were going up at an unparalleled pace, there was so much competition among lenders to make high profit loans, that underwriting guidelines became practically non-existent. Lenders in their exuberance, greedily made loans to just about any borrower who could sign their name. Not wanting to be saddled with too much debt, the lender bundled and sold off the riskier mortgages before the ink dried.
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.
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.
This is important because for a lender to be able to foreclose on a mortgage, that loan must be a legal contract. Loan violations are serious legal offenses and lenders are subject to heavy fines and legal penalties for breaking these laws. For the most part, financial institutions are run by rational business people, who do understand the financial consequences of their mistakes and usually want to avoid expensive litigation or risk being charged with large fines. When they are shown proof of their mistakes and backed up against the wall, lenders are more readily agreeable to working on terms more favorable to the homeowner.
How does a forensic audit help the homeowner? Mortgage violations are the basis by which your case can be argued with lenders. Generally, the more severe those violations are, the better your chances are of obtaining a favorable settlement. This settlement can include punitive damages, attorney fees, more affordable loan terms (such as a lower interest rate, lower monthly payments and/or a principal reduction), a delay or prevention of a foreclosure sale and more. When you consider the chances of any lender getting a favorable jury decision in any court in the country, one can understand why the lender might be inclined to negotiate a settlement.
What happens if there are violations in my loan? If a loan audit determines that you may have been a victim of deceptive lending practices or any other type of mortgage compliance issue, you may have the leverage necessary to negotiate with your lender. Many borrowers attempt to negotiate with the lender directly. In the early stages of loan modifications, many borrowers who did make deals without proper representation ended up back in the foreclosure process a few months later. Unless you have the time, knowledge and negotiating skills, you should hire an attorney to negotiate on your behalf. Otherwise your lender will either assume you are not serious in your intentions or grant you low priority consideration. Either way you are probably not going to achieve favorable results.
Violations of the Truth In Lending Act carry severe penalties. Most of the recent prosecutions have centered around this document which in recent years was not properly disclosed and/or presented in the loan package. 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. Costs and attorneys fees may also be awarded to the borrower. This is just one of the many documents the forensic audit team will scrutinize.
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.
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.
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.
This is important because for a lender to be able to foreclose on a mortgage, that loan must be a legal contract. Loan violations are serious legal offenses and lenders are subject to heavy fines and legal penalties for breaking these laws. For the most part, financial institutions are run by rational business people, who do understand the financial consequences of their mistakes and usually want to avoid expensive litigation or risk being charged with large fines. When they are shown proof of their mistakes and backed up against the wall, lenders are more readily agreeable to working on terms more favorable to the homeowner.
How does a forensic audit help the homeowner? Mortgage violations are the basis by which your case can be argued with lenders. Generally, the more severe those violations are, the better your chances are of obtaining a favorable settlement. This settlement can include punitive damages, attorney fees, more affordable loan terms (such as a lower interest rate, lower monthly payments and/or a principal reduction), a delay or prevention of a foreclosure sale and more. When you consider the chances of any lender getting a favorable jury decision in any court in the country, one can understand why the lender might be inclined to negotiate a settlement.
What happens if there are violations in my loan? If a loan audit determines that you may have been a victim of deceptive lending practices or any other type of mortgage compliance issue, you may have the leverage necessary to negotiate with your lender. Many borrowers attempt to negotiate with the lender directly. In the early stages of loan modifications, many borrowers who did make deals without proper representation ended up back in the foreclosure process a few months later. Unless you have the time, knowledge and negotiating skills, you should hire an attorney to negotiate on your behalf. Otherwise your lender will either assume you are not serious in your intentions or grant you low priority consideration. Either way you are probably not going to achieve favorable results.
Violations of the Truth In Lending Act carry severe penalties. Most of the recent prosecutions have centered around this document which in recent years was not properly disclosed and/or presented in the loan package. 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. Costs and attorneys fees may also be awarded to the borrower. This is just one of the many documents the forensic audit team will scrutinize.
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.
About the Author:
Arnold Stadneck, a retired building inspector, never heard of a forensic loan audit. When he and his wife remortgaged their modest family home in 2003 his bank acccount was so flush he never imagined that he would be one of thousands of borrowers, a victim of the financial meltdown, seeking a home loan modification within the next five years.
No comments:
Post a Comment