Loss Mitigation Specialist · Jacksonville, FL · Member since 2008 · 49 posts · 0 votes
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.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
After glancing thorugh this thread, there appears to be some bad information.
A fornesic loan audit is not the process of having you or your attorney tell the bank to "produce the note" which some have done to stall their foreclosure process.
Rather, a fornesic loan audit (at least a real one) is where an experienced attorney goes over your loan documents as well as the appraisal documents and idnetifies (if they exist) any violations in the TILA (Truth in Lending Act), loan fraud, appraisal fraud, RESPA violations, etc. Armed with these violations, you can then approach the bank not with your hands out begging for a loan mod, but with the threat of a lawsuit and demand that your loan be restructured, often times, receiveing funds back that you were overcharged, either in interest, or in fees, sometimes both.
Very few attorneys now this real process and many claim to provide the service, but all they use is some computer software to examine the loan documents. This same software was designed by the banks to use for themselves to help insure they do not violate TILA and RESPA laws. Obviously, their is no computer software replacement for real eyes on the docs.
Property Manager · Passaic, NJ · Member since 2008 · 369 posts · 83 votes
17y
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!!!
A forensic loan audit is where an attorney carefully examines the homeowner's purchase or refinance loan documents for small screw ups that may have been made by the lender so as to gain leverage for obtaining a result, that being capitulation by the lender. However, by crying "Foul!" the file is put in the legal--not loss mitigation--department where it takes longer to process and, the theory goes, is more prone to acquiesence by the lender.
Forensic loan auditing is a bad move, in my opinion, because once you call out the legal dogs, the lender is defensive, not cooperative, although the lawyers say otherwise, of course. (Job security 'n all.)
All you have to do is HINT that the lender did something wrong at the inception of the loan. The loss mit rep's tone changes abruptly and you're immediately transferred to the bank's legal department. End of short sale processing.
[AFFILIATE LINK REMOVED BY ADMIN - THESE LINKS ARE PROHIBITED ON BIGGERPOCKETS!!!]
Loss Mitigation Specialist · Jacksonville, FL · Member since 2008 · 49 posts · 0 votes
17y
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.
Bottom line: As a result of Judge Boyko's retarded ruling, not a single homeowner has been let off the hook. Foreclosure slightly delayed, maybe. Thrown out, no.
Real Estate Investor · Member since 2009 · 27 posts · 0 votes
16y
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?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
After glancing thorugh this thread, there appears to be some bad information.
A fornesic loan audit is not the process of having you or your attorney tell the bank to "produce the note" which some have done to stall their foreclosure process.
Rather, a fornesic loan audit (at least a real one) is where an experienced attorney goes over your loan documents as well as the appraisal documents and idnetifies (if they exist) any violations in the TILA (Truth in Lending Act), loan fraud, appraisal fraud, RESPA violations, etc. Armed with these violations, you can then approach the bank not with your hands out begging for a loan mod, but with the threat of a lawsuit and demand that your loan be restructured, often times, receiveing funds back that you were overcharged, either in interest, or in fees, sometimes both.
Very few attorneys now this real process and many claim to provide the service, but all they use is some computer software to examine the loan documents. This same software was designed by the banks to use for themselves to help insure they do not violate TILA and RESPA laws. Obviously, their is no computer software replacement for real eyes on the docs.
[[[.....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.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Not an urban myth at all, although I agree it is quite a "cheesy" strategy to delay the inevitable.
The fact is, many have done this and since borrowers originate their loans with one lender, then it is sold to another and another, paperwork is misplaced, not transfered properly or timely, etc and the documents are not organized and readily available. After all, banks have not appeared to have proper systems in place for several years now!
This has resulted in people delaying the foreclosure process until the lender who owns the note produces the note. Once they do, you can rest assured the borrower will be losing the home thereafter.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
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.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
And when they don't have the not ereadily available to produce, the borrower who asked for them to produce it stays in the home that much longer. A very underhanded thing in my opinion, but it is being done.
Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
16y
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.
Real Estate Investor · ten mile, TN · Member since 2009 · 1k+ posts · 374 votes
16y
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.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
16y
Originally posted by nationwidepi:
After glancing thorugh this thread, there appears to be some bad information.
A fornesic loan audit is not the process of having you or your attorney tell the bank to "produce the note" which some have done to stall their foreclosure process.
Rather, a fornesic loan audit (at least a real one) is where an experienced attorney goes over your loan documents as well as the appraisal documents and idnetifies (if they exist) any violations in the TILA (Truth in Lending Act), loan fraud, appraisal fraud, RESPA violations, etc. Armed with these violations, you can then approach the bank not with your hands out begging for a loan mod, but with the threat of a lawsuit and demand that your loan be restructured, often times, receiveing funds back that you were overcharged, either in interest, or in fees, sometimes both.
Very few attorneys now this real process and many claim to provide the service, but all they use is some computer software to examine the loan documents. This same software was designed by the banks to use for themselves to help insure they do not violate TILA and RESPA laws. Obviously, their is no computer software replacement for real eyes on the docs.
This post is accurate from what I have seen/learned. With the loss mitigators being overwhelmed right now I think this is a better strategy than it would be in a normal market. Lenders are on the defensive...often for good reason!
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
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
Real Estate Investor · Austin, TX · Member since 2009 · 118 posts · 76 votes
16y
From what I understand in speaking with the owner of a Forensic Audit Company out of Dallas, TX, is that their goal is not to get the bank to produce the note or even to prevent the bank from foreclosing. Rather what they do is shoe that the note had violations of TIL and RESPA, and use this opportunity to correct the note to negotiate a new interest rate.
Specifically it's an updated approach to a loan modification where instead of the bank having the upper hand, you have the upper hand due to the bank's errors. Modifying the loan is a less expensive alternative than going to court over this (especially with all the different parties involved). Also, this process will move much quicker; you can have a response to the loan mod within 30 days.
I know of 2 different investors who have recently entered into a forensic audit with this company. I'll keep you posted of the results.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Yep! I'm going to start numbering my paragraphs or stop explaining so much, even if people ask what something is, LOL. Paragraph 5, used for loan compliance...to see if the lender did what they were supposed to do and if not the borrower may have a claim against them under TIL, RESPA, FCRA, etc. or to base your request (blackmail) the bank into giving in to concessions.
Keep us posted Tom, as your friends will have first hand knowledge as to the outcome. Good luck, Bill
Real Estate Investor · Carlsbad, NM · Member since 2010 · 2 posts · 0 votes
16y
I have seen several forensic loan audits performed by a loan mod company that were successful.
This company had attorneys on staff to perform the audits and they were successful because they were able to show that the banks did not perform their due diligence in creating the loan and were forced back into negotiations with the homeowner.
Real Estate Investor · Carlsbad, NM · Member since 2010 · 2 posts · 0 votes
16y
Sorry Bryan I didn't quite answer the question, did I?
I have seen several completed. The process can take anywhere from 2 to 3 months and the homeowner has to continue making their current mortgage payments to qualify for the loan mod.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Debra, What has been the final outcome on these audits? You say "were forced back into negotiations with the homeowner. " That's something, if the alternative was to take the property to a foreclosure sale. But its not that same as having the debt completely forgiven like some have claimed. Or even having a loan mod of any significance (i.e, other than having the borrower resume making the same payments and having the back payments and fees tacked on the end.) What was the final outcome of these negotiations?