A mortgage loan audit, sometimes called a forensic audit, reviews the terms of your mortgage to assess the validity of the loan. If something goes wrong with the mortgage, forensic auditors say they can force a loan modification in your favor or terminate the loan altogether. The speed of this process depends on some factors, such as the ability to assure an auditor and their work. The average time for an inspection is up to two weeks.
If you’re looking for a home loan audit to negotiate better terms with your lender, a Federal Housing and Urban Development Advisor can provide information to help you avoid foreclosure. Your HUD representative can determine if you qualify for reduced monthly payments under the Homeowners Affordability and Stability Plan. Foreclosure prevention counseling is free and provides the same information as a for-profit agency or auditor.
Taking It to Court
Proponents of home loan audits say that most mortgages have a legal flaw that gives the homeowner the advantage of getting a better loan rate. However, in 2012, Illinois Attorney General Lisa Madigan said, “You can rarely use an audit to negotiate a lower rate with your lender.” Although many mortgage errors have been found, the only solution available to a homeowner who wants to reprimand the lender through a formal and legally binding process is the court system, which can be expensive.
The Federal Trade Commission strongly recommends not using private forensic mortgage lenders for forensic auditing. The home loan audit fee will cost you between $ 200 and $ 300. Your mortgage will be reviewed in a week or two. If the auditors find that the lender has failed to comply with your mortgage laws, they will be told that the report will help you reduce your mortgage payment, avoid foreclosure, modify your mortgage, or pay off your loan. says the FTC.
Common Mortgage Fraud Schemes and Scams
According to the FTC, “‘rescue’ professionals use half-truths and fraudulent lies to sell services that promise relief to troubled homeowners.” Madigan calls home loan audits a new breed of “mortgage rescue fraud.” If you’re looking for someone to check your mortgage for errors in hopes of getting lower payments or even paying off your loan, be on the lookout for scams. Madigan recommends using a HUD representative. A reputable attorney, someone with real estate and mortgage sales experience, can also help. Although you may find errors in your mortgage documents, you will need to file a lawsuit against the lender for any remedy.
The most common investor mortgage fraud schemes are various forms of change of ownership, employment fraud, and figurehead scam.
Ownership change is not normally illegal when it comes to buying a house, keeping/establishing it, and then reselling it for profit. On the other hand, when a property is purchased below market price and immediately sold for a profit with the help of a pollution appraiser who “certifies” that the value of the property is twice the initial purchase amount, mortgage fraud is reported.
In the case of a same-day closed exchange scheme, the securities chain and appraisal are often fraudulent and involve three parts: the seller, the exchanger, and the undisputed final buyer. The seller enters into a contract with the investor to buy the property below market value. The fin provides a fraudulent title insurance promise to the final buyer, showing the fin as the owner (although this is not the case) and valuing the inflated price agreed between the fin and the final buyer.
Employment fraud is a scheme used by investors to opt for a higher loan-to-value ratio and lower out-of-pocket purchase costs, as well as lower mortgage rates. Occupancy fraud occurs when borrowers claim to be employed by the landlord to obtain a favorable bank statement when the property remains vacant. The figure uses or allows a person to use your identity, credit score, and income to acquire property for another buyer who is not eligible for a mortgage (or who meets the requirements for the best rates). Investors often use prominent men, voluntarily or unknowingly, to cover up other forms and numerous layers of fraud.
The most common individual mortgage fraud scams are identity theft and misrepresentation of income/assets. Identity theft occurs when a buyer fraudulently obtains financing using information from an unwanted and unknown victim, including Social Security numbers, dates of birth, and addresses. Mortgage identity theft could also include stolen pay socks, bank records, tax returns, W-2 forms, and forged employment confirmation letters. Property records can even be falsified, and borrowers can obtain fraudulent mortgages on property they don’t own or replace.
Fight against mortgage fraud
There is no shortage of local, state, or federal legislation designed to reduce mortgage fraud. States have recently made great strides in requiring licensing and continuing education for loan officers. Additionally, real estate, title, and insurance agencies are licensed and supervised by government agencies. Many states also require periodic audits of mortgage lenders’ activities and transactions to monitor compliance.
Professional organizations such as the Mortgage Bankers Association (MBA) and the National Association of Mortgage Brokers (NAMB) have a peer-reviewed code of conduct and good practice. The FBI’s Economic Crimes Unit – II also oversees complaints and suspicious activity in the mortgage industry.
The bottom line
The Securities and Exchange Commission (“the Commission”) is adopting amendments to its rules on auditor independence to reorient the necessary analysis to determine whether an auditor is independent when the auditor has a loan relationship with certain shareholders. audit. . during a period of exploration or professional engagement. The amendments focus on the analysis of effective ownership rather than on registration and effective ownership; replace the existing 10% white line shareholder proof with a “significant impact” proof; the introduction of a standard called “reasonable inquiry” for the identification of the beneficial owners of the audited client’s capital values; and excluding from the definition of “audited client”, for an audited fund, any other fund that might otherwise be considered an affiliate of the audited client under the rules of a particular loan relationship. The amendments will identify debtor-creditor relationships that may affect an auditor’s objectivity and impartiality, as opposed to certain closer relationships that are unlikely to pose such threats, so the analysis will focus on those loans that are important to investors.
For information on foreclosure defense call us at (877) 399 2995. We offer litigation document review support, mortgage audit reports, securitization audit reports, affidavit of expert witness notarized, and more.