How Quickly Can I Get a Mortgage Loan Audit?

A mortgage loan audit, also known as a forensic audit, examines the terms of your mortgage to determine whether the loan is legitimate. According to forensic auditors, if there is a problem with the mortgage, you can compel a loan modification in your favor or cancel the loan altogether. The ease of this process depends on several variables, including an auditor’s availability and workload. An audit often takes up to two weeks.

HUD Choice

A federally licensed counselor can give you information to prevent foreclosure if you’re looking for a mortgage loan audit to discuss improved payment conditions with your lender. The HUD agent can tell you if you’re eligible for lower monthly payments under the Homeowner Affordability and Stability Plan. The same information is provided via foreclosure prevention counseling, which is unrestricted, as it is by a for-profit organization or auditor.

Filing a Lawsuit

Advocates for mortgage loan audits claim that most mortgages have a legal problem that offers the homeowner leverage to negotiate a lower interest rate. However, Lisa Madigan, the attorney general of Illinois, asserted in 2012 that “An audit can virtually never be utilized to negotiate a lower rate with your lender.” Although numerous mistakes in mortgages have been discovered, a homeowner seeking to hold the lender accountable through a formal, enforceable legal process must go through the court system, which can be costly.

Federal Alert

To acquire a forensic audit, the Federal Trade Commission strongly advises against engaging private forensic mortgage loan auditors. An audit of your mortgage loans will cost you between $200 and $300. In around one to two weeks, your mortgage will be examined. You will be advised that the report will help you lower your mortgage payment, avoid foreclosure, modify your mortgage, or cancel your loan if the auditors determine that the lender has not followed with mortgage lending rules, according to the FTC.

Scams

According to the FTC, fraudulent foreclosure “rescue” specialists “offer services that promise aid to homeowners in crisis while using half-truths and outright lies.” Mortgage loan audits are what Madigan refers to as a “new form of mortgage rescue fraud.” Beware of scammers if you’re looking for someone to check your mortgage for mistakes in the hopes that you might be able to get lower payments or perhaps have your loan canceled. Madigan suggests contacting a HUD agent. Another potential source of assistance is a good attorney, ideally one with knowledge of mortgages and real estate sales. Even if you discover errors in your mortgage documentation, you must use the lender to ensure that you will receive compensation.

Processes for Auditing Mortgage Files

Loan applications, property evaluations, and title records must all be examined by mortgage auditors.

1. Title Companies’ Function in Refinancing

If your business provides mortgages for homes, you might need to consult an auditor to look through your records occasionally. Mortgage file audits are used as internal quality control or external validation for publicly traded corporations that are required to file reports with regulatory bodies. A mortgage audit examines your application, review, and funding processes to ensure that all relevant laws are observed, all data are accurate, and the credit risk is acceptable. The majority of the time, these audits are carried out annually, but some lending institutions or regulatory bodies could prefer quarterly checks.

2. Approval Standards

The auditor will begin by examining your standards for approving new mortgages to ensure that no practices are unfair and that the risk level is suitable. The minimal standards for credit, income, appraisal value, debt-to-income ratio, and any other vital indicators your organization utilizes for evaluation are normally listed by him. Later on in the audit, this will serve as a reference for examining specific loan applications.

3. Credit History

A check of the credit reports used to approve mortgages must also be part of the audit. Equifax, Experian, and TransUnion credit reports are required for you to have. Check to make sure the names and Social Security numbers supplied are accurate and that no additional aliases or suffixes interfere with another person’s credit record. The estimates of the debt-to-income ratio ought to have considered all available credit. The auditor will also contrast the borrower’s credit rating with the minimal standards set by your business for approval.

4. Income Confirmation

Traditional workers who obtain W-2 forms at the end of the year can verify their income quickly. Lenders and auditors have a more difficult time due to independent contractors and self-employed people. The auditor will need to examine bank statements, tax returns, dividend and interest payments, and payouts from retirement plans for these borrowers to ascertain their overall income. He will compare the income listed in your papers and the income used for approval.

5. Property

The mortgage audit should also include an examination of the title search, mortgage insurance, and appraisal of the real estate utilized as security for the loan. If no other property is pledged as collateral, the appraised value must be enough to satisfy the whole loan total. A confirmation of the size of the property and any buildings present on the property, as well as copies of comparable transactions and a description of the valuation methodology the appraiser used to create his report, should all be included in the mortgage file. The auditor will also request a copy of the contested property’s title report and mortgage insurance policy. The title report shouldn’t contain pending claims, liens, or other flaws.

Documentation All pertinent paperwork, including the sales contract, trust deed, escrow instructions, loan documents, and closing statement, must be retained in the mortgage file. The closing statement should include a summary of the closing costs and the seller’s share of these charges. Check the contract for any odd provisions, such as the addition of personal property as collateral. Verify that the contract still complies with the requirements for approval.

6. Review Report

The auditor will write a report outlining the findings when the audit is complete. The analysis will highlight the weak points of the company’s approval and lending processes. Any problems the auditor comes across while performing the audit will be suggested as potential corrections. A follow-up audit may be planned to ensure the business has applied all of the suggested fixes.