Forensic Loan Audit: Opening the Door to Loan Modifications
During the housing boom of the early 2000’s, creative and exotic loans became the norm and it
seemed as if anyone could obtain a mortgage for any amount. However, what seemed like a
dream come true was in fact the nightmare of predatory loans. Studies of the lending practices
of the past ten years suggest that 80 percent of the home mortgages funded in the past decade
violate laws designed to protect consumers from predatory lending practices.
Predatory lenders often marketed mortgage loans with teaser interest rates, interest-only
loans, and negative amortization loans with the terms, if disclosed at all, buried in fine print
only comprehensible to the person who wrote the terms. Eventually those who had fallen prey
to these unscrupulous lending practices found themselves hard pressed to make their monthly
mortgage payments. When these homeowners approached their lender for a loan modification,
they found themselves either buried under mounds of paperwork or just refused a loan mod
Homeowners sought ways to bring the loan modification nightmare to a successful resolution
and found that a forensic loan audit was the essential tool needed. Statistics reveal that when
they are armed with the results of a forensic loan audit, lenders become more amenable to
completing loan modifications, which will stop foreclosure.
What Does a Forensic Loan Audit Involve?
A forensic loan audit involves a comprehensive detailed review of all the paperwork the lender
provided the homeowner at the closing of the real estate transaction. The auditor examines the
documentation to find evidence of the following:
• Errors and/or misrepresentation in the loan documents;
• Truth-in-Lending violations;
• RESPA violations;
• HOEPA violations;
• Inflated appraisals;
• Forgery and backdating of documents.
• Predatory Lending
Once the forensic loan audit is completed, the homeowner is notified as to whether the audit
discovered any evidence of fraud, predatory lending, or violation of consumer protection laws.
How Can A Forensic Loan Audit Help in Securing A Loan Modification?
Often a forensic loan audit can be enough to persuade a lender to concede to a loan
modification in order to avoid going to court. As the courts become flooded with foreclosures,
judges have become increasingly aware of the pattern of predatory lending and abusive lending
practices that ran rampant during the housing boom. Lenders and loan servicers have found the
court is much more willing to hear evidence of fraud and consumer protection laws; as a result,
many judges have ruled against servicers.
In fact, there have been rare cases where judges have voided the mortgage loan in its entirety.
Many lenders want to avoid this legal exposure so they are much more amenable to making a
loan modification when they are aware a forensic loan audit is available to the court.
Over the past year, more and more homeowners have pursued legal remedies because their
lenders did not truly and in good faith conduct the loan modification process, which resulted in
many good people losing their homes to wrongful foreclosures. This rising trend in litigation
against the lenders has caused those lenders to be much more attentive to the homeowner
who has a forensic loan audit.
It should be noted however, that homeowners who succeed in using a forensic loan audit to get
a loan modification have also put the task of negotiating that modification into the hands of
If you are considering getting a forensic loan audit to help you with the loan modification
process, it is important for you to also have the firm take over and complete your loan
modification process. They will know how to ensure that you get the best results possible.
Consider Tila Solutions (702 508-0335) to assist you with both the forensic loan audit and the