Loan Audit And Forensic Loan Analysis Reports

If your company offers mortgages for houses, you may sometimes need to hire an auditor to review your records. Mortgage file audits are utilized by publicly traded firms that are obliged to file reports with regulatory organizations as internal quality control or external validation.

A mortgage audit looks at your application, review, and financing procedures to make sure that all applicable laws are followed, all data is accurate, and the credit risk is acceptable. These audits are typically conducted annually; however, certain regulatory agencies or lending institutions may prefer quarterly inspections.

Below are the processes required:

• Approval Criteria

The auditor will start by looking at your criteria for approving new mortgages to ensure that there are no unfair practices and that the risk level is appropriate. He typically lists the minimum requirements for credit, income, appraisal value, debt-to-income ratio, and any other significant indications your company uses for evaluation. This will be used as a guide later on in the audit when looking at particular loan applications.

• Credit Report

The audit must also include a review of the credit reports used to approve mortgages. You must own credit reports from Equifax, Experian, and TransUnion. Verify that the names and Social Security numbers provided are correct, and make sure that no extra aliases or suffixes are affecting another person’s credit history.

All forms of credit must have been included in the debt-to-income ratio estimations. The auditor will compare the borrower’s credit score to the minimum requirements established by your company for approval.

• Earnings verification

The income of traditional workers, who get W-2 forms at the end of the year, may be readily checked. Independent contractors and self-employed individuals make it more challenging for lenders and auditors.

To determine these debtors’ total income, the auditor will need to look at their bank statements, tax returns, dividend and interest payments, and disbursements from retirement plans. He will compare the income shown on your paperwork with the income used to grant your request.

• Property

An evaluation of the title search, mortgage insurance, and real estate appraisal used to secure the loan should also be part of the mortgage audit. The assessed value must be sufficient to cover the whole loan amount if no other property is offered as security.

In addition to copies of comparable sales and an explanation of the valuation technique the appraiser used to produce his report, the mortgage file should include and validate the property’s size and any buildings on the property. The auditor will also ask for a copy of the disputed property’s title report and mortgage insurance policy. The title report shouldn’t include any outstanding lawsuits, liens, or other errors.

• Documentation

The mortgage file must be kept intact with all important material, such as the sales contract, trust deed, escrow instructions, loan documents, and a closing statement. The closing statement should provide a summary of the closing costs and the seller’s portion of such costs.

Make sure there are no strange clauses in the contract, such as adding personal property as collateral. Check to see whether the contract still satisfies the criteria for approval.

• Report on Review

The auditor will compile his or her findings into a report when the audit is finished. The research will draw attention to the shortcomings of the company’s lending and approval procedures. Any issues the auditor encounters while conducting the audit will be listed along with possible solutions. A follow-up audit may be arranged to make sure the company has implemented all recommended solutions.

How soon can I expect to get a mortgage loan audit?

A forensic audit, commonly referred to as a mortgage loan audit, looks into the conditions of your mortgage to see whether the loan is valid. Suppose there is an issue with the mortgage.

In that case, according to forensic auditors, you may force a loan modification in your favor or cancel the loan entirely. The simplicity of this process depends on a variety of factors, including the workload and accessibility of the auditor. Usually, an audit takes up to two weeks.

• HUD Option

If you’re searching for a mortgage loan audit to negotiate better payment terms with your lender, a federally registered counselor may be able to provide you with information to avoid foreclosure. The HUD agent may inform you whether you qualify for reduced monthly payments under the Homeowner Affordability and Stability Plan. Free foreclosure prevention counseling offers the same information as a for-profit company or auditor.

• Taking legal action

According to proponents of mortgage loan audits, most mortgages involve a legal flaw that gives the homeowner the ability to bargain for a lower interest rate. However, an audit may practically never be employed to negotiate a lower rate with your lender.

Despite the fact that there have been many uncovered errors in mortgages, a homeowner trying to hold the lender responsible via a formal, enforceable legal process must go through the courts, which may be expensive.

• Federal Warning

The Federal Trade Commission strongly discourages using private forensic home loan auditors to get an audit. You will have to pay between $200 and $300 to have your mortgage loans audited. Your mortgage will be reviewed in one to two weeks.

Suppose the auditors find that the lender has not complied with mortgage lending regulations. In that case, you will be informed and told that the report will assist you in lowering your mortgage payment, avoiding foreclosure, amending your mortgage, or canceling your loan.

• Scams

According to the FTC, fraudulent foreclosure “rescue” professionals, using half-truths and blatant lies, provide services that promise help to homeowners in difficulty.” Mortgage loan audits are the “new sort of mortgage rescue scam.

If you’re looking for someone to review your mortgage for errors in the hopes that you could be eligible for lower payments or perhaps the cancellation of your loan, be on the lookout for con artists.

A competent attorney, particularly one who has experience with mortgages and real estate transactions, is another possible source of aid. Even if you find mistakes in your mortgage paperwork, you must still file a lawsuit against the lender to guarantee that you will get compensation.