BACK OFFICE LAW
Real Estate Services
Provide a Forensic Mortgage Audit
Submission of Qualified Written Request to Lender
Free Loan Modification Analysis if previously turned down
Free Loan Modification Guidance for new submission
What Is A Forensic Mortgage Audit?
Simply put a Forensic Mortgage Audit is the comprehensive review of all loan
documentation including legal documents, transactional data, and other evidence pertaining to
your real estate loan that has been funded. A forensic mortgage audit identifies any illegalities
performed by the lender, their broker, or other parties in conjunction with the mortgage.
During the audit process, skilled professionals review all documents received from your lender
from the date you applied to the date you funded your loan including any envelopes, faxes and
emails to ensure that your loan meets all legal requirements that were in effect at the time the
loan was funded
Loans must be legal to remain enforceable by the lender. Loan violations are serious
offenses of Federal Consumer Protection Law and lenders may face stiff fines and legal
consequences for breaking these laws.
Business people run mortgage bankers, banks and servicers. Consequently they
understand the financial ramifications of their mistakes and usually want to avoid expensive
litigation or risk being charged with large fines. When their money is on the line, these firms can
often be persuaded to more easily reach agreement with their borrowers.
If a loan was funded unlawfully, the borrower may be entitled to compensation, a
refund of all interest and principal payments made for the last three years, all non-recurring
closing costs, legal fees, or a renegotiation or modification of the terms of the loan. From 2000
to 2007, tens of thousands of loans were funded unlawfully. Your loan may be unlawful, and
you may be entitled to substantial damages whether or not you're currently in foreclosure.
A forensic mortgage audit determines violations of the laws governing lenders. An audit
report provides a powerful tool for negotiating with your lender. Whether you need your loan
modified or you need to sell your home as a “short sale” or even if you need to have your loan
rescinded, your lender will be motivated to work with you when you have evidence of their
Violations are the leverage used to present your case with your lender. The more
violations discovered, the better your chances of obtaining a favorable settlement. The chances
of a successful settlement increase with the most severe violations.
What Findings Are In The Forensic Loan Audit?
1. Violations of Federal, State or Local Laws
Numerous federal, state and local laws cover the act of using your home as collateral in
obtaining a mortgage. These laws are in place to protect your rights when you use your home as
collateral in a mortgage transaction. The audit professional will review your loan documents to
determine if there are differences between the disclosure of information in your loan documents
you received and the disclosure of information required by law. The audit professional will also see
if there were TILA, RESPA and HOEPA violations by your lender.
2. Constructive Fraud
Material facts include the terms of the loan, whether there is a prepayment penalty, or any
other information, which a reasonable borrower would want to know before accepting the loan.
Did the broker or loan officer or anyone working for the broker or loan officer fail to disclose any
material facts to the borrower?
3. Fraud and Negligent Misrepresentation
Were any representations, statements, or comments, written or oral made by the loan
officer, broker, escrow or anyone else, which contradicted the terms of the documents? When
a mortgage professional makes errors that a reasonably diligent mortgage professional would
not have made, he or she may have made a negligent misrepresentation.
4. Excessive Fees
Were there any excessive fees or improper charges made by the lender or loan broker? Are
there any deceptive, abusive or predatory lending practices or an excessive prepayment penalty?
Is there a Net Tangible Benefit to the Borrower in the mortgage transaction? Was there a proper
analysis to determine if the Borrower can afford the payments on the loan? Were the fees
5. Breach of Contract
The note and its attachments are a contract. The lender must follow all the terms of the
contract such as the way the interest is calculated, and the penalties are assessed. Were there
any terms in the contract, which the lender failed to follow?
How Back Office Law Uses the Forensic Mortgage Audit
Once the loan audit determines that you may have been a victim of deceptive lending
practices or any other type of mortgage compliance issue stated above (statistically, nearly every
loan has at least some violations), you have the leverage to fight your lender.
The course of action you should take is often dependent upon your current situation. You
will either be referred to our partners who specialize in Loan Modifications using our audits as
leverage or you will be referred to Attorneys we work with who can immediately file a Federal
lawsuit on your behalf.
Armed with our audit indicating the lender’s violations, the Loan Modification firm will
negotiate with your lender for a reduced payment and even possibly a reduction of your principal
balance. Or, the Attorney will reach a settlement agreement with your lender using our audit to
support your claim. If the claim continues into trial our audit will demonstrate to a judge and jury
how the lender willfully failed to comply with the law.
If you are not seriously delinquent on your loan, but have difficulty making your mortgage
payments, you may want to consider the use of our loan modification partner to assist you in
reaching an agreement with your lender to modify your loan terms. A loan audit disclosing
violations will certainly give you leverage you need to get the best loan modification.
If you have received a Notice of Default or are in Foreclosure, you should consider hiring an
Attorney who is skilled in consumer advocacy, predatory lending and real estate law. If you need
help in locating a skilled Attorney, we may be able to assist you.
The Attorney will reach a settlement agreement with the lender (most cases) or
continue on to trial (rare situations) and demonstrate to a judge or jury how the lender has
willfully failed to comply with Federal Law.
In most cases, it is NOT necessary for you to make mortgage payments while the lawsuit
is pending, however placing your mortgage payment in a trust account will show good faith to
the court as well as quickly add up for a sizeable fund to negotiate with, if needed.
It is also unlawful for the lender to report negative information about you to the Credit
Reporting Agencies while the lawsuit is pending under the Fair Credit Reporting Act.
If you are in foreclosure, the proper litigation can stop the foreclosure process
immediately. A loan audit disclosing violations will stop a foreclosure in its tracks. The law gives
a borrower a limited amount of time to act. If you wait, you may not be able to take action
later. Back Office Law legal counsel is available to you when this type of advise is needed.
The Federal Trade Commission on FMA’s
The FTC, a commission of the Federal Government has issued a warning about Forensic
Mortgage Loan Audit Scams. BOL brings this to your attention because we too want to prevent
you from being scammed by unscrupulous individuals who are more intent on getting money
from you than helping you save your home. This is what they say on their website:
http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm The following is an abridged
quote from that site. We at BOL do want you to be fully informed.
“Fraudulent foreclosure “rescue” professionals use half-truths and outright lies to sell
services that promise relief to homeowners in distress. In exchange for an upfront fee of several
hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure
prevention auditors backed by forensic attorneys offer to review your mortgage loan
documents to determine whether your lender complied with state and federal mortgage
lending laws. The “auditors” say you can use the audit report to avoid foreclosure, accelerate
the loan modification process, reduce your loan principal, or even cancel your loan.
“Nothing could be further from the truth. According to the FTC and its law enforcement
partners: there is no evidence that forensic loan audits will help you get a loan modification or
any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained
auditor, mortgage professional or lawyer.
“Some federal laws allow you to sue your lender based on errors in your loan
documents. But even if you sue and win, your lender is not required to modify your loan simply
to make your payments more affordable.
“If you cancel your loan, you will have to return the borrowed money, which may result
in you losing your home.
“If you are in default on your mortgage or facing foreclosure, you may be targeted by a
foreclosure rescue scam. The FTC wants you to know how to recognize the telltale signs and
report them. If you are faced with foreclosure, the FTC says legitimate options are available to
help you save your home.
Spotting a Scam
If you’re looking for foreclosure prevention help, avoid any business that:
guarantees to stop the foreclosure process – no matter what your circumstances are
instructs you not to contact your lender, lawyer or credit or housing counselor
collects a fee before providing any services accepts payment only by cashier’s check
or wire transfer
encourages you to lease your home so you can buy it back over time
recommends that you make your mortgage payments directly to it, rather than your
urges you to transfer your property deed or title to it
offers to buy your house for cash at a fixed price that is inappropriate for the
pressures you to sign papers you haven’t had a chance to read thoroughly or that
you don’t understand.” end of quote