AVOIDING FORENSIC LOAN AUDITS

A forensic loan audit is where someone reviews the documents that were used to originate your loan and determines whether any violation of State or Federal law exists in your loan agreement with your lender. State and Federal lending guidelines require certain disclosures to be provided to a borrower at the time a real estate loan is taken out, and forensic loan audits look specifically for violations of these laws.  Our firm does not do forensic loan audits and advises clients to avoid them.  The following information explains why this firm does not perform forensic loan audits and why we do not recommend them to our clients.

Someone who does a loan audit will often tell the consumer that if they find Truth In Lending Act (TILA) violations or Real Estate Settlement Procedures Act (RESPA) violations, that your lender will give you a loan modification based on the violation. That is far from the case. While these violations can technically be legal claims, your lender will usually not even pay attention to the violation unless a lawsuit is filed in court. Even then, the filing of a lawsuit does not guarantee that the lender will settle the lawsuit by giving you a modification.  There is a time and place for a review of the loan documentation, but just finding violations is not a real service.  A legitimate attorney will review your loan documentation as part of a lawsuit, and generally will not be available for hire simple to give you a report on whether a violation occurred.

Homeowners should realize that there are complex issues involved with real lender litigation.  Many banks are protected under federal laws such as the National Banking Act and the only claims that can be brought against them are with a regulatory agency, not a basic consumer lawsuit.  Lawsuits are often dismissed on this basis. Also, there are time limits within which you must bring your claims against the lender, many of which are within one year of the original loan date. Even the right of rescission’s three year time limit is complicated because you often have to give back the property and loan proceeds in order to move forward with that remedy.  This is why most legitimate attorneys do not engage in representing clients in lawsuits against the lender.

Our office is interested in doing projects for clients that get results.  The most effective way to get a reduction of your monthly mortgage payment is, and has always been, working with the bank on loan modification.  Lawsuits are often an excuse for attorneys to charge high hourly billable fees with no guarantee of success.  Do not be taken in by lofty claims that an attorney can make the banks “pay” for the harm done to you.
There is no magic bullet that makes a bank modify your loan – accurate financial reporting, meeting the lender’s underwriting criteria, and dogged persistence in the loan modification process are the most effective methods of securing a more affordable payment for your family.