BiggerPockets

Anyone out there has any experience or results with forensic loan audits?
I know companies that start doing that, but I don't know about any results as it is take a very long time to finish it.
:roll:
I know how is that work, but I don't know about any rsults.

Have never heard of this one but I've been through a forensic accounting of my books and records on properties, complete with depositions, interrogatories and mortgage document analyses.............was not FUN!!!

Thank you Caitlyn for your explanation.

I'm so glad that someone has knowledge in this aspect. (great forum)

Have you seen from your experience in forensic loan audits something like this ?:

"If original loan was made by one of the many sub-prime lenders that have gone out of business it is quite possible that no one can find original note "

No original note, no debt ?!

The fact is that almost all loans taken out in the last few years were sold off to other banks and investment banks 30 minutes before the ink dried on the paper. This loans has probably been divided into dozens if not hundreds of pieces, and original note was either boxed away and is inaccessible or just plain lost because of carelessness. As far as the respectable part, well frankly the mortgage industry is not very highly regarded right now.

Do you know from your experience that this can be true ?
If the Lender cannot prove they have the legal right to foreclose Attorney will pursue a "quiet title" action to remove all debt from the property. It will be affordable for homeowner to continue to live in the home while Attorney exhaust homeowner legal remedies. With the help of legal team, the debt can be brought down to a reasonable and manageable level that homeowner can afford.

For example in Riverside county CA market where houses went down in some places 50% that is a massive tool
for homeowner in default.

Do you have any knowledge of that ?
Always appreciate any help.
Thank you.

Thank you for your link to this subject article.
Again Appreciate your help.

Has anyone here has success or heard of success from others who keeping bank from attempting to foreclose on their home using this tactic.....asking banks to provide original notes?

[[[.....asking banks to provide original notes?....]]]]

I can't even imagine. This has to be one of those urban myths.

I know that any escrow company I've ever used keeps copies of all the paperwork they've done.

I'd think you'd have to prove that you didn't borrow the money, and that would be hard to do. The bank could supoena your original paperwork, which you've kept, right? to prove that you bought the place.

Here in CO you absolutely have to produce the original deed of trust document in order to close out a note. So, any lender in CO, or their servicer, must keep the actual original pieces of paper.

Underhanded indeed.

Another example of there being too many attorneys in the US.

Maybe every loan that goes under a forensic loan audit should have the borrowers' audited as to their income documentation, assets etc. Certainly many of these loans were "Stated Income Stated Assets".

One of these days the note holder is going to "bite back" and it will be a bad day for the borrower that committed federal loan fraud.

The Deed of Trust is, yes. But the promissary note is only referrenced to in the Deed of Trust and the actual document (promissary note), which is the proof of your owing the loan, is not recorded in the public records.

The Deed of Trust only ties the property to the promissary note as collateral for nonpayment.

A record of that Promissary note should be available to all parties involved.
The borrower recieves a copy.
The lender recieves a copy.
The trustee recieves a copy.
The escrow account recieves a copy.
The Title company recieves a copy.
The preparing Attorney recieves a copy.
Off course some of these may be all "in house" at lenders.

There are always too many copies around (that were originally notorized) for this cheezy move to be effective unless one party gives up because they do not want to do the work needed to retrieve the copy.

That is the only time the tactic actually works.

Hi, just to clarify....a forensic accounting or audit off anything is auditing from from the inception of a transaction forward to date. A forensic loan audit is the examination of a loan from the time of application (and can include letters, say to provide a certain rate of interest to intice a borrower to make application) and related documents, called source documents to ascertain compliance with applicable rules, regulations and laws.

A forensic audit is not necessarily done by an attorney, and usually not unless they have an accounting background. An attorney may review source documents for compliance but that is another issue.

When bank examiners audit loans, that is or can be a forensic audit. Reasons to do them vary. Obviously in a loan review for compliance during a bank examination. When a portfolio of loans is sold, independent audits will be performed on a sample of the portfolio tto ensure compliance. If one loan is sold to a buyer, that buy may review the origination of the loan, so that too is a kind of forensic examination.

Loan portfolios are examined at different times by the institutions holding the obligations, again on a sample basis. Over a period of time a loan may be audited several times, especially if there were initial concerns. The audit process usually picks up where the old audit left off. As with bank examinations, an audit or exam date is established and everything is brought current to that date.

I think what the original post concerns is the success in audits finding issues of non-comlpliance for the popular purpose of having loans written off or foreclosures terminated. I have only heard of such success, but I can tell you it depemnds where you bring this type of action. In a rather liberal court, I understand that there has been success, if you were to bring such claims in my county, the judge will laugh at you, I'm sure!

Loan examinations and audits accomplished by lenders and regulators are confidential, secret, so there is not public disclosure. The outcome or information related to a regualtory loan examination is higly confidential and is never made public knowledge except when legal proceedings dictate disclosure. General information, may be disclosed about loans being sold to related parties, obviously. FDIC for example may disclose information as statsical anaysis or where the headlijnes might read, FDIC finds 2,000 non-performing loans.

So, to answer the OP, there is no way I know of to verify the claims of these attorney shams that attempt to stop foreclosures, if that's what you were getting at, other than going back and looking up the court cases.

The National Association of Forenic Accountants is here in my town. I have had opportunities to join and was asked to provide audits for law enforcement locally, but I had enough of that as an Examiner! A friend of mine is a forensic auditor and we don't talk specifics either, I wouldn't ask. Good luck, Bill