What is A Forensic Loan Audit?

What is a Forensic Loan Audit?

A Forensic Loan Audit is the comprehensive review of all documentations, legal paperwork, transaction data, and other evidence pertaining to a real estate loan that has already been funded in the near, or distant past. 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, National Loan Auditors will review your loan to ensure that it meets all legal requirements that were in effect at the time the loan was funded.

 

The reason this is important is that:

1. Loans must be legal to remain enforceable by the lender.
2. Loan Violations are serious offences of Federal Consumer Protection Law and lenders may face stiff fines and legal consequences for breaking these laws.

Lenders, banks and investors are firms run by rational business people. Lenders 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, lenders can often be persuaded to mend situations more easily with homeowners.

 

The good news is, most laws are there to protect you, the homeowner. The law is on your side.

 

Surprisingly, during the credit boom of 2003-2007 as much as 90% of all loans funded had violations of some sort, with varying degrees of severity. 

 

The bottom line is this:  violations are the leverage used to argue your loan modification case with lenders. Generally, the more violations, and the more severe those violations are, the better your chances are of obtaining a loan modification.

National Loan Auditors Forensic Loan Audit identifies legal violations and inaccuracies performed during your loan process. The first step of any loan modification or argumentation process should always be to obtain a Forensic Loan Audit.  

 

 

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What is included in a Forensic Loan Audit?

NATIONAL LOAN AUDITORS has a thorough process for auditing each loan to determine its legality, accuracy, and potential to be modified based on our extensive experience in auditing loans. For each loan audit, we provide results report of all factual findings of the forensic audit; find research and report on any applicable federal law violations; determine and calculate the real terms of your loan. We find and report on any "hidden" fees and/or commission earned by your broker or lender. We then provide a complete assessment so you can pursue possible legal claims against your broker and/or lender.

A NATIONAL LOAN AUDITORS Forensic Loan Audit Includes:

1. Complete client interview and all applicable parties
2. Complete and detailed loan document and disclosure audit, performed by underwriting experts focused on fraud and compliance
3. Comprehensive compliance check against the Truth in Lending Act (TILA) and Real Estate Settlement & Procedures Act (RESPA)
4. Reverse engineering of your loan terms and Annual Percentage Rate (APR) for possible TILA violations
5. Complete 10-12 page report with all violations and findings, color-coded violations severity alert (VSA), and professional legal review by a staff attorney.
6. 20-Minute Telephone Consultation with an Attorney to determine his/her Legal Opinion and next-step recommendations.

• Fraud and Negligent Misrepresentation
  Were any representations, statements, or comments, written or oral made by the loan officer, broker, notary or anyone else which contradicted the terms of the documents? When a mortgage professional makes errors which a reasonably diligent mortgage professional would not have made, he or she may have made a negligent misrepresentation.

• Excessive Fees
  We look for Excessive Fees and Improper Charges by your Lender. We also look for Deceptive Abusive Predatory Lending Practices, Excessive Prepayment Penalties, Tangible Benefits to the Borrower, Affordability to the Borrower, Home Mortgage Disclosure Act (HMDA) Data, Broker Fee Agreements, and State and Federal Disclosure Accuracy.

• Breach of Contract
  The note and its attachments are a contract. The broker must follow all the terms of the contract such as the way the interest is calculated, and the penalties it assesses. Were there any terms in the contract which the lender failed to follow?

 

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What happens if NATIONAL LOAN AUDITORS finds violations in my loan paperwork?

Once we determine that you may have been a Victim of Deceptive Lending Practices or any other type of Mortgage Compliance Issue stated above, you have the choice to hire one of our affiliate attorneys to send an official written request to your Lender, on your behalf.

 

Your attorney will first attempt to settle the Loan Issue/Documented Dispute with the Lender prior to filing complaint(s) with any agency and inform the Lender of the Issues we have found in our detailed “Forensic Audit and Loan Review”.

 

Once they review the documented report we send them, detailing the alleged illegalities and violations committed by them, or their representatives, most Lenders will have little choice but to settle immediately.

  In the event, the Lender fails to respond to the official written request within 20 days of notice or fails to settle within a 60 day time period, the attorney can file a lawsuit with the lender on your behalf.  

If your loan was funded unlawfully, you may be entitled to compensation, a refund of all interested paid to date, or a renegotiation of the terms of your loan.

From 2000-2007, 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. The penalties for failure to comply with the Truth In Lending Act can be substantial.

 

A creditor who violates the disclosure requirements ma*y 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, amounting in to the scores of thousands of dollars. . Costs and attorney's fees may also be awarded to the consumer.

 

A lawsuit must be begun by the consumer within a year of the violation, but certain tolling provisions apply giving the consumer more time and up to 3 years to file suit. These laws are in place to protect you, the homeowner, and the American people as a whole.  

 

National Loan Auditors can provide you with a completed Forensic Loan Audit in as little as 7 business days.

 

Order your Forensic Loan Audit Now!

What Are The Laws?

Federal and state laws protect consumers by providing strict guidelines that govern the structure and paperwork of real estate loans. The primary department that governs is the Federal Department of Housing and Urban Development (HUD).  In the mid '70's, HUD passed the Real Estate Settlement Procedures Act (RESPA) designed to empower consumers with clearer information and eliminate hidden settlement charges. Since that time, Congress and many states have passed laws protecting the consumer from unscrupulous lenders and predatory lending practices.

 

The laws are varied, numerous and complex and they cover a variety of issues, from limits on charges, rates and fees; to the maximum amount of time that can pass between milestones in the mortgage process. Other laws govern what information the consumer must receive, when it must be presented, and the penalties to the lender if these laws are broken.

 

Penalties that the lender can suffer for failing to adhere to the law include civil penalties, as well as restitution to the consumer for interest paid on "bad" loans. (In other words the lender would be required to return all or some of the interest you paid on the loan to date.) In addition, a foreclosure can be brought to a halt during legal questioning of the legitimacy of a loan.

How Does This Affect me?

If you are in foreclosure, the Truth In Lending Act can stop the foreclosure process immediately.

 

Take action and protect your rights under the law. The law gives you a limited amount of time to act. If you wait, you may not be able to take action later. Take action now.

 

Order your Forensic Loan Audit Now!

 

What is Predatory Lending?

Predatory lending is a hot topic in the news and there is a good reason why. Dishonest behavior by many lenders, bankers, brokers and their sales force have caused financial ruin worldwide in the last year or so. As property values fall, energy costs soar, consumers become unable to pay exorbitant mortgage fees. The collapse of the sub-prime market is a direct result of predatory lending. Here are the various types of predatory lending:

• Pay Option Loans
  Many lenders and mortgage brokers have acted dishonestly and without integrity by providing teaser rates and "pay option" loans. Bottom line is that many lenders and brokers knew these loans were too good be true, and borrowers weren't told the truth. By law, contracted real estate professionals have a fiduciary responsibility to their clients (They must act in the best financial interest of their clients.). When they fail to do so (usually earning significant commissions at great financial cost to their clients), it is called Predatory Lending.
• Stated Income Loans
  Predatory Lending can also apply to all aspects of the mortgage industry and can also refer to the dishonest practice where a broker or creditor may put a borrower into a loan that the borrower will probably not be able to repay. Federal laws like the Truth In Lending Act ("TILA") and the Real Estate Settlement Procedures Act ("RESPA") (as well as many state laws) require that creditors disclose certain terms of loans to borrowers, and when those terms are not disclosed or are inaccurately disclosed, these laws provide severe monetary penalties against these creditors.
• Bait & Switch
  Predatory lending tactics like the classic bait and switch. You're sold on the phone by a smooth talking loan officer who pitches you a great rate. Things move quickly and when you appear to sign your loan documents with a notary at the closing table, the loan costs have increased significantly and/or that great rate isn't so great anymore. You wonder, "what happened" but it s too late. You are already at the closing table and you face significant penalties for delays in the transaction by the seller, or you already are committed to a refinance because you need the cash out. You've been taken advantage of by a predatory lender.
• Elder Abuse
  Elder abuse is really common because retirees often have a large amount of equity in their homes, they are prime targets for greedy and crooked creditors. We have seen mortgage sellers cold call elderly homeowners and then scam them into a loan which they do not need, can not afford, and which provides the seller with an incredibly large commission. Both federal and state law prohibit the mortgage industry from providing different loan terms to people based on race, sex, ethnicity, or other protected class. Such a transaction may be subject to a cause of action under the Unruh Civil Rights Act or other law. Equity theft also called equity skimming, refers to the situation whereby the same creditor refinances the same property with the same borrower multiple times and uses the equity in the borrower's property. 

How the Law Can Help You

The Truth In Lending Act (“TILA”), and the Real Estate Settlement Procedures Act (“RESPA”) are violated daily by lenders and predatory lending victims are everywhere.

 

You may be a victim, and if you are seeking information on the internet about foreclosure assistance, then statistically, you probably are a victim and you should call us for assistance.   

 

Real estate laws are in place to protect you, the borrower and homeowner, but yet are often completely disregarded. The truth is, your loan is probably unlawful, and you may be entitled to substantial damages whether or not you’re currently in foreclosure.

 

The first step is to find out if you are a victim of predatory lending. Have our Forensic Auditors review your loan file and provide you with a written audit identifying violations by your lender. The more violations you have, and their severity, the better chance you have of stopping, or reversing a foreclosure.

INVESTIGATION OF POTENTIAL STATUTORY VIOLATIONS:

There are three major laws that govern the transactional process of real property.

• Truth-In-Lending Act ("TILA")
• Home Ownership Equity Protection Act ("HOEPA")
• Real Estate Settlement Procedures Act ("RESPA"), Regulation Z, or State Law

We review your loan documents (the papers you signed when you applied for the loan and the papers you signed when you closed the loan). We investigate whether the information and calculations provided in those documents was accurate, truthful, and met the requirements of the applicable federal and state statutes.

 

We research and analyze what the lender, broker, and agent told you about the loan. We focus on whether the loan you were told you were getting was actually the loan you received. We determine whether there were predatory lending violations of federal law which give rise to the right for you to rescind or cancel your loan. If the attorney is successful in rescinding the loan, you may be entitled to receive back all of the interest paid on the loan, all of the points and fees paid to get the loan, all fees paid by you to the lender in connection with the loan, and statutory penalties. This allows you to get a new loan with a smaller principle, meaning that your mortgage can be affordable.

 

We at National Loan Auditors have a strict code of ethics and professional responsibility to adhere.  We treat all audits very seriously, and focus on providing serious attention to all matters. 

 

Order your Forensic Loan Audit Now!

 

Federal TILA

FEDERAL TRUTH IN LENDING ACT Special Alert for Homeowners: The Truth In Lending Act (“TILA”), and the Real Estate Settlement Procedures Act (“RESPA”) are violated daily by lenders and mortgage companies. These laws are in place to protect you, the homeowner, but yet are often completely disregarded. Your loan is probably unlawful, and you may be entitled to substantial damages whether or not you’re currently in foreclosure.

 

If you are in foreclosure, the Truth In Lending Act can not only stop the foreclosure process immediately (without bankruptcy), but also put money in your pocket. Once TILA and/or RESPA violations are discovered in your loan documents, your lender will be eager to discontinue the unlawful foreclosure process and settle the dispute.

Filing a Law Suit

If you want to learn more about the Federal Truth in Lending Act, let us assist you in contacting an attorney who is familiar with the Federal Truth in Lending Act. The Federal Truth in Lending Act is a very specialized area of law, and only a few attorneys in the country are able to take on mortgage companies in this regard.

 

We can provide Forensic Loan Audits to homeowners throughout the Nation, and as our attorneys network expands we can offer relief to qualifying homeowners in several states. Most loans (especially those in foreclosure) will qualify for this program, but time is critical. We need time to fully analyze and evaluate your mortgage documents and then have an attorney prepare a case, a recession file, or a lawsuit. The first step to this process is to obtain a Forensic Loan Audit.

 

Order your Forensic Loan Audit Now!

 

 

Here is an overview of how our program works:

1.     We conduct a Forensic Loan Audit which scrutinizes the mortgage documents you received upon the closing of your loans(s) and look for TILA, RESPA and/or HOEPA violations by your lender. Once you receive your Audit, you will know what violations, if any, were committed in the handling of your loan. (Statistically, nearly every loan has at least some violations.) You can then decide if you should proceed to seek a loan modification. If you do proceed,

2.     A referral attorney can immediately file a Federal lawsuit on your behalf, and place a Lis Pendens on the property, to stop the foreclosure process (if applicable) and begin litigating your causes of action against the lender(s).

3.     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.

4.     In most cases, it is NOT necessary for you to make mortgage payments while the lawsuit is pending, although placing the money in your bank account is often considered a gesture of good will.

5.     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.

General Information about TILA

Truth in Lending Act (15 U.S.C. §§ 1601-1667f, as amended)The federal Truth In Lending Act was originally enacted by Congress in 1968 as a part of the Consumer Protection Act.

 

The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The Truth In Lending Act is designed to reduce confusion among consumers resulting from the different methods of computing interest and prevent fraud, deception and unfair business practices. It does not require creditors to calculate their credit charges in any particular way. However, whatever alternative they use, they must disclose certain basic information so that the consumer can understand exactly what the credit costs. The Truth in Lending Act is implemented by the Federal Reserve Board.

Regulation Z says lenders MUST comply with the consumer credit parts of the law.

Regulation Z applies to offers or extensions of consumer credit if four conditions are met:

1. The credit is offered to consumers.
2. Credit is offered on a regular basis.
3. The credit is subject to a finance charge (i.e. interest) or must be paid in more than four installments   according to a written agreement.
4. The credit is primarily for personal, family or household purposes. If credit is extended to business, commercial or agricultural purposes, Regulation Z does not apply.

Federally Mandated Loan Disclosures

One of the biggest lending transactions any individual is likely to enter into is borrowing money to purchase a home. These transactions have become much more complicated in recent years.

 

Historically, someone trying to buy a home had very few options. Often, only a traditional thirty year fully amortized loan was available. Now, consumers can obtain loans of various duration and interest rate variations that can become quite complex.

 

The Federal Reserve Board and the Federal Home Loan Bank Board have published a book entitled "Consumer Handbook on Adjustable Rate Mortgages " to help consumers understand the purpose and uses of adjustable rate mortgage loans. Regulation Z requires that creditors offering adjustable rate mortgage loans make a special disclosure booklet available to consumers.

Full Disclosure

Disclosure is generally required before credit is extended. In certain cases, it must also be made in periodic billing statements. The term "closed end credit transaction" is defined by exclusion. That is, it includes any credit arrangement (either a consumer loan or credit sale) that does not fall within the definition of an "open end credit transaction".

 

Open end credit includes credit arrangements like revolving credit cards, where the "borrower" (that is the credit card holder) is not required to pay off the principal amount by any particular point in time. Rather, the borrower is simply charged interest periodically and is usually required only to make some minimum payment.

Under Regulation Z however, disclosure must be made of the following important credit terms:

 

• Finance Charge - This is perhaps the most important disclosure made. This is the amount charged to the consumer for the credit.
•  Annual Percentage Rate - This is the measure of the cost of the credit which must be disclosed on a yearly basis. The method for calculating this rate is determined the underlying transaction.
• Amount Financed - This the amount that is being borrowed in a consumer loan transaction, or the amount of the sale price in a credit sale.
• Total of Payments - This includes the total amount of the periodic payments by the borrower/buyer.
• Total Sales Price - This is the total cost of the purchase on credit, including the down payment and periodic payments. Evidence of compliance with the Truth In Lending requirements must be retained for at least two years after the date of disclosure.

Disclosures must be clear and conspicuous and must appear on a document that the consumer may keep.

Other Features of the Truth in Lending Act

 

The Truth In Lending Act has other important features. If you elect to advertise credit terms, the law requires disclosure of key lending terms. Also, the law entitles the consumer the right to rescind certain credit transactions under certain circumstances, such as home equity loans. The penalties for failure to comply with the Truth In Lending Act 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. Costs and attorney's fees may also be awarded to the consumer. A lawsuit must be begun by the consumer within a year of the violation, but certain tolling provisions apply giving the consumer more time.

 

The first step for all of our services is the Forensic Audit.