Loan Audits are the single most powerful tool available to homeowners when negotiating with their lender.
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What is a Loan Audit?
Are there different types of Audits?
Why is a forensic loan audit important?
What is the likelihood that a forensic audit will reveal a regulatory violation?
How can I be assured that my forensic audit is accurate?
How long does it take to perform a forensic audit?
A Forensic Mortgage Loan Audit results in a comprehensive audit that reveals violations of Federal, State, County and Municipal Codes including RESPA, TILA, HOEPA, ECOA, and Tangible Net Benefit, detailing every violation, their severity, and the specific Code in violation. All of the forensic loan audit reports will reveal these guiding queries:
- Did the lender provide a good loan? Did the lender violate obvious "Good Faith" guidelines? For example, did they qualify the borrower for a loan that they could not afford?
- Did the lender violate TILA guidelines? Did they tell the borrower one thing, but delivered something different at the closing?
- Did they provide the correct documentation to the borrower at the proper times? Was it filled out correctly?
- Are the parameters of the loan in violation of the Real Estate Settlement Procedures Act (RESPA) or the Truth in Lending Act (TILA)?
- Did the loan deliver a Tangible Net Benefit to the Borrower?
Are there different types of Audits?
Yes there are a few different types of Audits and we will go over the 3 main types:
- Basic Compliance Audit - 99% of all companies provide a Basic Compliance Audit whereby your documents are run through a software program and a 20 to 30 page report is generated. This is a very basic audit that generally will have mistakes and no real substance.
- Investigative Audit - An investigative Audit includes the above but also a qualified investigator will thoroughly review the loan docs to check for violations, check licensing of those that issued the loan and for accuracy of data information.
- Forensic Audit - Many people call audits Forensic Audits however it's important to note a TRUE Forensic Audit is no less than 120 pages, takes 4 full days to process and involves very in depth research. In Forensic Audits you must provide not only all of your closing documents but your original appraisal as well.
Would you rely on a doctor who performed a physical without lab work? Or a mechanic that serviced your engine without looking under the hood? A forensic audit is important to gaining the attention of the loss mitigation departments of the major lenders and servicers. It demonstrates to the lender and servicer that the borrower is being represented by a competent professional, that negotiations should proceed promptly and that it is in all parties interest to reach a win-win resolution. The forensic audit is also important to the loan modification process because it gives the borrower's representative leverage when negotiating with the lender and servicer. Violations of federal and state consumer protection laws relating to mortgage lending may enable the borrower to rescind (effectively cancel) the loan, serve to block a foreclosure, or may entitle the borrower to refunds or monetary damages. Moreover, in cases where the borrower cannot show hardship, has no equity in the home, or does not have sufficient income to support a modified loan, the forensic loan audit is the only means of blocking foreclosure proceedings or compelling the lender to agree to new loan terms.
What is the likelihood that a forensic audit will reveal a regulatory violation?
There is a very reasonable probability that a given mortgage transaction materially violates one or more consumer protection laws. The mortgage industry's struggle to comply with consumer protection laws is nothing short of staggering. A remarkable report published by the inspector general for the FDIC reveals that 83% of federally supervised banks that made loans at the peak of the mortgage boom were cited for patterns of "significant compliance violations." (You can download a copy of the FDIC report here). Importantly, the FDIC regulates banks that generally did not engage in sub prime lending and that are required to have minimum regulatory controls in place. The percentage of lenders failing to comply with regulatory requirements is even higher for state-licensed, non-bank lenders—such as Ameriquest, New Century and Option One—who were responsible for originating 52% of sub prime mortgages and are subject to a much broader patchwork of state regulation.
How can I be assured that my forensic audit is accurate?
By employing knowledgeable experts and utilizing the industry’s most comprehensive and precise regulatory auditing tool, Loan Mod Forensics makes certain that the complexities and nuances of mortgage consumer protection laws are fully considered. This approach reflects our commitment to being the leading provider of the most accurate residential mortgage forensic loan audits available.
How long does it take to perform a forensic audit?
The time it takes to complete a forensic loan audit varies depending on the complexity of the mortgage transaction and completeness of the loan file. However, audits are usually completed within two weeks. Expedited audits are generally available.
