Negotiating a Loan Modification with your lender is not an easy task. We invariably feel we are at a disadvantage when dealing with a large corporation or wealthy investor. However, you might have more tools at your disposal than you think. This article looks into the power of forensic loan audits and how they can be used to create extra leverage for our loan modification application, or as the title states: to speak softly with a big stick.
The idea behind using a forensic mortgage loan document audit is to get lenders on your side, albeit with a little arm twisting. A forensic mortgage loan audit checks your loan documentation for any federal or state violations or errors. Evidence shows that most loan mortgages have significant violations. Once violations have been documented they can be used to take a lender to court and in some cases get the loan cancelled.
How do you carry out a forensic loan audit?
First, you need data to work with. You need all your loan documents. The process starts with a Qualified Written Request, a QWR. This is a formal request for copies of your loan documents. Your lender is required by law to produce these documents and pronto. The documents that are requested include:
- An Initial Loan Application and Final Loan Application.
- Deed of Trust
- Truth in Lending Statements
- Good Faith Estimates
- Copy of Loan Payment History
- Grant Deeds
- Title Report
- Itemization of Amount Financed
- All fees incurred, escrow account disbursements and details on how payments were calculated.
The list goes on and should be as thorough as possible. The more documents you revise the more chances you have to find a violation in procedure.
Second, an audit must be carried out on your loan. There are many mistakes and violations that can be discovered by a forensic audit. These include violations to the Truth in Lending Act (TILA), usury violations, misleading disclosures, overstated home values, predatory lending, and lack of good faith estimate compliance, to mention just a few.
How does this help? If I violation is discovered, however serious you get leverage with your lender. If for instance you are overcharged, even by a small amount, or the annual percentage rate (APR) is a fraction higher than what you were told, your lender could be in breach of the Truth in Lending Act. This will make your lender feel much more motivated to giving you a beneficial loan modification.
Carrying out a forensic loan audit is not a simple task. Unless you have experience in loan modifications and Real Estate law you are probably better off contracting the services of a lawyer. This will of course cost money, but the return on your investment could be well worth it if it helps you get the loan modification you need.
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