Distressed Homeowners
Fighting Back With Forensic Loan Audits
Distressed homeowners facing foreclosure are now fighting back with the aid
of a Forensic Loan Audit, forcing lenders to the negotiating table for fear of
a costly lawsuit.
Washington, DC – November 6, 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 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.
National Loan Audits was founded by Dean Mostofi and it is based in Rockville, Maryland.
Errors in loan documents can help borrowers.
WASHINGTON, DC — Homeowners who are having difficulty getting the attention of their lenders to discuss their troubled mortgages might want to obtain a forensic loan review to determine if their lenders made any mistakes when the mortgage was issued.
Even a $35 miscalculation on the lender's part could be an actionable offense, and the threat of a lawsuit can be enough to persuade the lender to deal with you in trying to find a way to help you work through your financial difficulties.
In a forensic loan review, a legal pathologist scours your loan documents looking for errors in, among other things, the truth-in-lending statement the lender provided shortly after you applied for your mortgage and the lender's annual percentage rate calculation so you could compare loan costs.
If the truth-in-lending statement doesn't match the HUD-1 closing-cost sheet you received at closing, if the APR is off by just a hair, you might have cause for legal action against the lender.
Typically, forensic loan audits are ordered by mortgage investors to determine what kind of legal liability confronts them in the pools of loans they already own or are considering buying. As a so-called business-to-business service, they are not generally available to individual borrowers.
But National Loan Audits is now offering comprehensive loan-document reviews to consumers as part of its service to help homeowners facing foreclosure.
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