A mortgage audit is a thorough multi-point examination of the loan documents and disclosures that identifies any overcharges by the lender due to inaccuracies in the computation of interest rates, monthly payments, amortization, or loan balance. Mortgage audits also turn out fee omissions, breaches of TILA, RESPA, HOEPA, and other federal lending rules, as well as instances of predatory lending. Mortgage audits may be helpful for homeowners who are worried about overcharges, mistakes in judgment, or illegal fees and are in the process of going through a foreclosure or looking for a loan modification.
Homeowners can use the audit results to request compensation from their lender for any overcharges, bad judgment calls, or other violations of federal lending regulations.
It is important to emphasize that all mortgage types may experience errors that lead to overpayments. Reverse mortgages, home equity loans, and fixed- and adjustable-rate mortgages fall under this category.
By employing a mortgage audit to confirm the accuracy of their lender’s calculations, homeowners can quickly and simply “win their case” and collect reimbursements from their lender for any overcharges. The homeowner can decide immediately if they have been overcharged after receiving the comprehensive audit report.
If your company offers mortgages for homes, you might need to hire an auditor from time to time to review your records. Mortgage file audits are employed by publicly traded firms that must submit reports to regulatory bodies as an internal quality control measure or as an external validation.
A mortgage audit looks at your application, review, and funding procedures to ensure all applicable laws are followed, all data is accurate, and the credit risk is acceptable. These audits are typically conducted annually, but some regulatory agencies or lending institutions may prefer quarterly inspections.
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 indicators your company uses for review. This will be used as a guide later on in the audit when looking at particular loan applications.
The audit must also include reviewing 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 ensure that no additional aliases or suffixes affect another person’s credit history. The estimations of the debt-to-income ratio should have accounted for all credit options. The auditor will compare the borrower’s credit score to the minimum requirements established by your company for approval.
The income of traditional employees, who receive W-2 forms at the end of the year, can be easily 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 records, tax returns, dividend and interest payments, and disbursements from retirement plans. He will compare the income stated in your paperwork and the income used for approval.
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 appraised value must be sufficient to cover the entire loan amount if no other property is offered as security. In addition to copies of comparable sales and a description of the valuation technique the appraiser used to produce his report, the mortgage file should also validate the size of the property and any buildings on the land. The auditor will also ask for a copy of the disputed property’s title report and mortgage insurance policy. The title report shouldn’t contain any outstanding lawsuits, liens, or other errors.
The mortgage file must be kept with all relevant information, such as the sales contract, trust deed, escrow instructions, loan documents, and a closing statement. The closing statement shall summarize the closing costs and the Seller’s share of such costs. Ensure there are no strange clauses in the contract, such as adding personal property as collateral. Check to see if the contract still satisfies the criteria for approval.
Report on Review
The auditor will compile their findings into a report after finishing the audit. The analysis will draw attention to the shortcomings of the company’s lending and approval procedures. Any issues the auditor runs into while doing the audit will be recommended as potential fixes. A follow-up audit may be arranged to make sure the company has implemented all recommended fixes.
Various Forms of Forbearance
Depending on your service provider, there are several mortgage payment reduction possibilities. They might let you postpone payments for a while or lower your monthly mortgage payments slightly. However, it is important to consider how extending your mortgage term may affect your interest payments.
Students who have trouble repaying their debts frequently request payment assistance. Students eligible for payment reduction should also consider the interest that will accumulate on their loans.
Consumers who are having financial difficulties may be able to receive payment relief from several credit card companies. Reducing minimum payments, cutting interest rates, eliminating late penalties, and delaying monthly bill due dates are a few examples of ways to make credit card payments easier. Your credit card issuer and the sort of card you carry will determine the precise kind of relief you are eligible for.
Advantages and Drawbacks of Forbearance
With the help of forbearance, borrowers can stop making payments on their loans, mortgages, or credit cards, preventing them from going into default. Requesting payment relief is preferable to taking the chance of defaulting on loans because forbearance has no negative effects on your credit score, but a default would.
To keep your personal assets from being seized by your lender during the period of payment relief, forbearance also means that you can escape foreclosure for your failure to make missed loan installments. Additionally, it enables you to cover more important costs like rent, utilities, or medical bills.
The borrower runs the danger of damaging their credit score if they cannot adhere to the forbearance restrictions. In addition, interest will continue to accrue during the payment relief period and must be paid after it is over. Your current sum will be increased by the interest accrual, which could worsen your financial situation.
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.