Common Types of Forensic Loan Audit Findings

A forensic loan audit is a comprehensive analysis of a borrower’s mortgage documents and payment history to identify any potential wrongful or illegal practices by the lender. The audit is typically conducted by a third-party auditor who is knowledgeable about mortgage lending laws and regulations. The goal of a forensic loan audit is to uncover any irregularities in the mortgage transaction that may have resulted in harm to the borrower.

The findings of a forensic loan audit can be crucial for borrowers who are facing financial difficulties or foreclosure. By identifying any violations or errors by the lender, borrowers can take legal action to challenge the loan or seek damages. In this article, we will discuss some of the common types of forensic loan audit findings.

These findings may include violations of federal laws such as the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), and the Homeowners Protection Act (HPA). Predatory lending practices may also be uncovered, such as charging excessive fees or steering borrowers into subprime loans. Additionally, the audit may reveal errors in mortgage servicing, such as miscalculations of interest or improper application of fees or charges.

Understanding these common types of forensic loan audit findings can help borrowers better understand their legal rights and options. By working with a qualified and experienced forensic loan auditor, borrowers can increase their chances of uncovering any wrongdoing by their lender and achieving a favorable outcome in their loan dispute.

By identifying any violations or errors by the lender, borrowers can take action to protect their rights and achieve a fair resolution to their loan dispute.

1. Violation of Truth in Lending Act (TILA)

The Truth in Lending Act (TILA) is a federal law that requires lenders to disclose the terms and costs of a loan to borrowers. A forensic loan audit may reveal that the lender failed to disclose certain fees or charges, or provided inaccurate or misleading information to the borrower. These violations may give the borrower legal grounds to challenge the loan and seek damages.

2. Violation of Real Estate Settlement Procedures Act (RESPA)

The Real Estate Settlement Procedures Act (RESPA) is a federal law that requires lenders to disclose all fees and charges associated with a mortgage loan. A forensic loan audit may uncover violations of RESPA, such as kickbacks or referral fees paid to third parties, or failure to provide accurate information to borrowers about the costs of the loan.

3. Violation of Homeowners Protection Act (HPA)

The Homeowners Protection Act (HPA) is a federal law that requires lenders to remove private mortgage insurance (PMI) once the borrower has paid enough of the loan to reach a certain equity threshold. A forensic loan audit may uncover violations of HPA, such as the lender failing to cancel PMI when required, or continuing to charge the borrower for PMI after it should have been removed.

4. Predatory Lending Practices

A forensic loan audit may reveal that the lender engaged in predatory lending practices, such as charging excessive fees, steering borrowers into subprime loans, or misrepresenting the terms of the loan. These practices may be illegal and can give the borrower legal grounds to challenge the loan or seek damages.

5. Mortgage Servicing Errors

A forensic loan audit may also uncover errors in mortgage servicing, such as miscalculations of interest or escrow payments, improper crediting of payments, or improper application of fees or charges. These errors can lead to the borrower being overcharged or falling behind on payments, which can have serious consequences for their credit and financial stability.

Why Do I Need A Forensic Loan Audit

There are several reasons why you might need a forensic loan audit. Here are a few common scenarios:

• You are facing foreclosure: If you are at risk of losing your home due to foreclosure, a forensic loan audit can help uncover any wrongful or illegal practices by your lender that may have contributed to your financial difficulties. This information can be used to negotiate with your lender or take legal action to challenge the foreclosure.
• You believe you were the victim of predatory lending: If you believe that your lender engaged in predatory lending practices, such as charging excessive fees or steering you into a subprime loan, a forensic loan audit can help uncover evidence to support your claim.
• You want to lower your mortgage payments: If you are struggling to make your mortgage payments, a forensic loan audit can help identify errors in your mortgage servicing, such as miscalculations of interest or improper application of fees or charges. This information can be used to negotiate with your lender for a loan modification or other form of debt relief.
• You want to ensure that your loan is compliant with federal laws: If you want to ensure that your loan is compliant with federal laws such as the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), a forensic loan audit can help identify any violations and ensure that your rights are protected.

Conclusion

Forensic loan audits play a crucial role in identifying any wrongful or illegal practices by lenders, and they are especially important for borrowers who are facing financial difficulties or foreclosure. The findings of a forensic loan audit can help borrowers better understand their legal rights and options, and take legal action to challenge the loan or seek damages.

Common types of forensic loan audit findings include violations of federal laws such as TILA, RESPA, and HPA, as well as predatory lending practices and errors in mortgage servicing. Understanding these findings can help borrowers navigate the complex legal landscape of mortgage lending and take appropriate action to protect their rights.

It is important to work with a qualified and experienced forensic loan auditor to ensure that the audit is conducted properly and that any findings are accurate and reliable. Borrowers should also be aware of the statute of limitations for filing claims related to mortgage lending violations, as well as the potential costs and risks associated with legal action.

Disclaimer: This article should not be considered legal advice. Thank you