Forensic Loan Audit: A Weapon for Distressed Homeowners to Fight Back

Forensic loan audit is a new weapon for distressed homeowners to use in their fight to save their home from foreclosure. Homeowners who have adjustable rate mortgages, are victims of predatory lending, or individuals who are having trouble making their mortgage payments now have a new weapon to add to their arsenal for negotiating power with their lender.

What is there to negotiate?

Mortgage modification is often a desirable option for homeowners facing foreclosure. Some lenders will agree to modify the terms of the mortgage to make it affordable for homeowners to keep their homes. The reason they will do this is to mitigate their losses. For example, they might reduce the interest rate or increase the mortgage term to reduce the monthly payment rather than proceed with a lengthy foreclosure process and be stuck with a house that they cannot sell in today’s distressed real estate market.

Sounds like a No-Brainer – Why would it be Difficult?

The process of negotiating a loan modification is often a difficult process for the average homeowner, especially one who is emotionally distressed because they are in danger of losing their home. Just getting the right person on the phone to speak with can be quite a task.

The average homeowner has little chance of negotiating an affordable mortgage modification with lenders who have more resources at their disposal.

Negotiating Power for Distressed Homeowners

Now there is a new weapon for distressed homeowners to add to their arsenal; the Forensic Mortgage Audit, also referred to as a forensic loan audit, forensic loan examination or forensic mortgage review. The forensic loan audit can be performed by mortgage industry experts to determine unfair or unethical lending practices, violations of the Truth in Lending Act, or unintentional errors in preparing loan documents.

According to the Truth in Lending Act, even a small error in calculations or failure to properly disclose the terms of the loan can result in the borrower being awarded a refund of closing costs, finance charges or interest payments. They may even be entitled to rescind the mortgage.

Until recently, forensic mortgage audits were only available to banks and large lending institutions to determine their own liability exposure when purchasing mortgage loans. Forensic loan examinations are now available to distressed homeowners to use as negotiating power with their lender.

Attorneys and mortgage modification services are using forensic loan audits to assist borrowers in negotiating loan modification. Their findings provide leverage for the homeowner to use in coming to an affordable work out agreement with their mortgage servicer.

Studies have shown that nearly 80 percent of mortgage files that are reviewed are found to contain violations ranging from unintentional mathematical errors to blatant fraud. The intent of the forensic mortgage review is to encourage the lender to negotiate an affordable mortgage modification so the borrower keeps their home while the lender mitigates their losses. Most lenders would rather reduce the interest rate or extend the mortgage term than be faced with a lengthy and costly lawsuit.

My Mortgage Auditor provides relief to distressed homeowners in Oakland County, Southfield, Pontiac, Royal Oak, West Bloomfield, Farmington Hills, Wayne County, Detroit, Dearborn, Canton, Livonia, Westland, Macomb County, Sterling Heights, Warren, St. Clair Shores, and neighboring cities and communities.