Homeowners Fighting Foreclosure with Forensic Loan Audit

by admin ~ November 10th, 2008.

National Loan Audits announced today that troubled homeowners with adjustable rate mortgages who are having trouble getting their loans modified or who are behind with their payments and in danger of losing their home, now have access to forensic loan audits, performed by mortgage industry experts, to discover if their lender violated the Truth in Lending Act or made any errors while preparing their closing documents and neglected to adequately disclose the terms of their loan.

According to the Truth in Lending Act even a small mistake with calculating the borrower’s annual percentage rate could be an actionable violation, enabling the borrower to rescind the loan. Therefore, the threat of a lawsuit is often sufficient to persuade an otherwise uncooperative lender to negotiate an attractive work out with the borrower.

Until recently Forensic Loan Examinations were only made available to large banks and lending institutions wanting to determine their own exposure to risk and potential legal liabilities prior to purchasing large pools of mortgage loans. But now a Maryland company staffed by veteran mortgage professionals is offering this service to distressed homeowners at an incredibly affordable price. “While our competitors may charge up to $3000 for a Forensic Loan Audit, we decided to offer this product at a price almost anyone could afford” Said Dean Mostofi, the founder of National Loan Audits in Rockville, Maryland, a Washington, DC suburb. The firm charges $495.00 for a comprehensive mortgage document review and provides the homeowner with a 40-page written report that contains a detailed listing of their findings in an easy to read format.

Mostofi says that over 80% of the loan files reviewed by his firm contain violations ranging from small and unintentional mathematical errors to blatant fraud and misrepresentation. The most common violation is the understatement of prepaid finance charges and in many instances a mere $35 error within the Truth in Lending disclosure statement could entitle the borrower to a refund of all finance charges, closing costs and interest payments made since the inception of the loan.

Forensic Loan Reviews are also used by attorneys assisting borrowers with loan modification and foreclosure defense but according to Mostofi most lawyers who contact him don’t know much about the more creative legal tactics currently being employed by a handful of savvy foreclosure attorneys. Consequently, Mostofi also offers a consulting service to attorneys helping them understand the remedies available to their clients in the event the lender violated the Truth in Lending Act or if it cannot prove ownership of the note. “Amazingly, many lenders don’t legally own the note” says Mostofi “but since no one challenges their right to foreclose, they get away with it” he added.

The intent of an audit is not to force the parties in to a lengthy and costly lawsuit but rather to encourage the lender to sit down with the borrower and to negotiate an affordable loan work-out so the borrower can keep the home and the lender can mitigated its loses. “The audit is to give homeowners more ammunition so they can stand a chance in negotiating a decent modification with lenders who have far more resources than the average borrower and often play hardball unless they are faced with the risk of a costly lawsuit” said Mostofi.  > to view complete article

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One Response to “Homeowners Fighting Foreclosure with Forensic Loan Audit”

  1. loan modification Says:

    Hi. I am a long time reader and I appreciate your articles that promote foreclosure prevention.. I wanted to say that I like your loan modification blog and the layout. We too, provide loan work-outs and mortgage relief for distressed homeowners. – Robert Black

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