Prevent Foreclosure Advice: Was Your Home Loan Legal? Get a Forensic Loan Audit to Find Out
Prevent Foreclosure Advice: What Is a Forensic Loan Audit
In basic, layman’s terms, a forensic loan audit is simply an examination of all the documents you signed when you got your home loan to see if they comply/complied with lending laws.
The legality surrounding forensic loan audits stem from the 1968 Truth in Lending Act (the TILA). This law is also known as the Consumer Credit Protection Act. Its purpose is to:
. . . promote the informed use of consumer credit, by requiring disclosures about its terms, cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
As it relates to home loans, it short, it lays out the rights of homeowners when they take out a mortgage.
How a Forensic Loan Audit Can Help You Prevent Foreclosure
And, here’s how/why it can help you.
You see, every detail of your home loan (your mortgage) must be disclosed, explained and disseminated when you take out the loan. But really, who takes the time to read all of that info? Practically no one. That’s why the loan officer explains every piece of paper you sign at your closing. They’ll give you a brief explain, say something like, “Understand? Have any questions?”
And when you say, “Yes, I understand and no I don’t have any questions,” they say, “Sign here.”
During the last housing boom (late 90s to about 2005), many lenders took so many shortcuts that some lending laws might have been violated. Remember all the of the “exotic home loans,” like zero percent down with a credit score of only 580?
These days you can’t get a zero percent down home loan with perfect credit! Most of these types of home loans have disappeared.
This just underscores how crazy some of the home loans were during the last housing boom. I know, I was a mortgage consultant for a time during this period. Banks, lenders and mortgage brokers played “loosy goosy” with federally mandated compliance guidelines (ie, the stipulations of the Truth in Lending Act) during this time.
During a forensic loan audit, if you find violations, this can be used as a bargaining chip with your lender when trying to prevent foreclosure.
When you undergo a forensic loan audit, all of the documents you were presented with and signed at your closing will be reviewed – with a fine-tooth comb. Some things that will be looked at is whether or not you signed the right documents, the mathematical calculations of the interest on your home loan; the actual loan terms; etc.
If you have this done by a professional (eg, an attorney), they will present you with a detailed report of the findings.
While some who perform loan audits will tout that mortgages have been completely wiped out because of violation of the TLA terms, this is rare.
How Much Do Forensic Loan Audits Cost?
Rates vary if you hire someone to do a forensic loan audit for you. They can be from a low of $500 on up to a few thousand.
Beware of Home Foreclosure Scams
There are a lot of home foreclosure scams out there. And, this can be one of them. If you decide to have a forensic loan audit done, do your research. Don’t be pressured into it and whatever you do, don’t hand money over to someone unless and until you have thoroughly checked them out and you get something in writing.
Make sure they’re a legitimate firm. Compare firms; don’t just go with the first one to contact you through the mail.
Read more on how to avoid home foreclosure scams.
If you’re trying to prevent foreclosure via a home loan modification, a forensic loan audit can be a great place to start because it gives you leverage when it comes time to negotiating with your lender.
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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.