Certified forensic loan audits for court use.

Certified forensic loan audits for court use.

A forensic loan audit is an audit that is done by conducting a thorough analysis of a mortgage loan to determine the compliance of a lender to the stated federal laws. The audit consists of a thorough investigation sing scientific methods and analysis of documents to establish the laws that have been violated. The forensic loan audits are conducted by a forensic auditor who goes through the loan documents to identify irregularities that may be in the loan documents and give a report on the findings.

The audit identifies incidences of fraud, misrepresentation, overstated values, misleading disclosures and issues of fraud. The information that is gathered from the audit is then presented to the lender who will use it to negotiate the loan or as evidence in the court in case he/she decides to follow up on the case. Usually this is the last resort is a negotiation fails.

The loan audit must be performed diligently and carefully to ensure that all the issues are well presented.   The attributes for a good loan audit is that;

  • It should be conducted scientifically.
  • It should involve the review of all the loan documents and compared to the laws that are applicable to the type of loan.
  • All loan documents of the client/borrower should be assessed during the audit.
  • A comprehensive report should be produced after the audit. The report should contain all information on the findings of the audit process and recommendations on the steps to take to avoid the mistakes identified.

The forensic audit loan report should be summarized in a report that is to be presented before the court. The report should be easily understood and contain the following;

  • Profit margins of the securitizing parties
  • Length of time the full amount was recovered in relation to the original lien amortization.
  • Promissory note assignees who are verified
  • Trace of endorsements
  • Qualifying ratios at origin
  • TILA AND RESPA violations
  • Robo -signature trace of forgery and flaws in the foreclosure process
  • Securitized trust verification
  • Pooling and servicing agreements
  • Trust prospectus
  • Details of bond performances
  • Loan reporting in securitized trusts
  • Client specific information among others
  • Loan recordings and any other financial reports.
  • Deed transfers and recordings


To be able to conduct the forensic loan audit the auditor should;

  • Accept the investigation- the auditor will ensure that his /her skills match the type of assignment to be conducted. A certified forensic loan audit should be performed by a forensic auditor who has been trained on the process of conducting the forensic audit and has certification on the same.
  • Plan the investigation-here the auditor will identify the end goal of the audit and gather the necessary tools and techniques that will be used in the audit.
  • Gather evidence- this is the main part of the audit and it involves using of scientific methods and analysis to compare trends over time and to identify the weaknesses that may have caused the irregularities to occur.
  • Reporting- after the investigation has been completed and the errors identified, the auditor should come up with a detailed and well understood report on the findings of the audit which will then be presented to the client.

The final step in the forensic loan audit report is usually the court process. The client may opt to go to court with the evidence collected so as to get the court to rule in their favor in regards to the loan payment.  The auditor will serve as an expert witness in the case and the audit report will be presented as a signed affidavit of the findings. For a free consultation please go to







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