Loan Forensic Audits: How To Legally Get Out Of Your Bad Loan
by John P. Allen, General Manager of the Veterans Today Network
Leverage! Remember that buzz word! You see when Veterans look for a mortgage, whether it be a VA Home Loan, FHA, or conventional, they rely on professional advice and the aid of a mortgage broker or lender. The loan process is complicated and most everyone places their trust in the professional that is guiding them through the process.
Unfortunately, many of these professionals placed thousands and thousands of borrowers in loans that they could not afford or in just down right exotic mortgages, that now have become extinct.
Predatory lending is a buzz word that is floating around the blogosphere right now and for good reason. There are thousands and quite possibly maybe a million plus people that have mortgages where the Truth in Lending Act was violated, thus falling under the predatory lending statue. Many can stop foreclosure if they only knew what to look for and how to defend themselves.
LOAN AUDIT DOCUMENT
This report is a very specialized and imperative in identifying if a borrower is a victim of predatory lending. A professional review is made of all loan documents and a thorough investigation for miscalculations are made to determine if the loan terms are accurate, truthful, and met the requirements of the applicable federal statutes.
The # 1 goal is to determine whether there were violations of federal law. If these violations are found, then the borrower may be eligible for complete relief of the predatory loan. This is known as a loan rescission. Meaning the lender takes back the “predatory loan” and awards or credits back to the borrower all interest made on payments thus far, loan origination fees, all applicable lenders fees, penalties and attorney’s fees.
This can be done by means of a Loan modification or a new affordable loan. This allows the borrower to get a new loan with a smaller principle, meaning that the mortgage can be affordable and non-predatory.
FORENSIC LOAN DOCUMENT AUDIT
What is contained in a Forensic Audit?
- A complete client interview is made and all applicable parties are interviewed
- A complete loan document and disclosure audit using the Truth in Lending Act (TILA) and Real Estate Settlement & Procedures Act (RESPA)
- A reverse engineering of your loan terms and Annual Percentage Rate (APR) for possible TILA violations are made
- A complete multi page report is made with all violations and findings and a summary that is accepted by the courts
Material facts include the terms of the loan, whether there is a prepayment penalty, or any other information which a reasonable borrower would want to know before accepting the loan. Did the broker or loan officer or anyone working for the broker or loan officer fail to disclose any material facts to the borrower?
FRAUD AND NEGLIGENT MISREPRESENTATION
Were any representations, statements, or comments, written or oral made by the loan officer, broker, notary or anyone else which contradicted the terms of the documents?
When a mortgage professional makes errors which a reasonably diligent mortgage professional would not have made, he or she may have made a negligent misrepresentation.
BREACH OF CONTRACT
The note and its attachments are a contract. The broker must follow all the terms of the contract such as the way the interest is calculated, and the penalties it assesses. Were there any terms in the contract which the lender failed to follow?
All of these things above can be found by taking the time and effort to do a FORENSIC AUDIT of your loan. With this information, it’s like having a loaded gun. It gives you leverage in the negotiations. You don’t have to fire, you just have to politely point it as the assailant and ask them nicely to rethink their hard line. In the lending business, most people at the lenders are just employees doing their jobs. It’s not a personal thing or some fanatical reason they are not talking to you. No, it’s just that are simply doing what makes profits for their employers. The only way to get anywhere with them is to use leverage!
So, the key is to raise the cost of them NOT negotiating with you by getting a Forensic Loan Audit and bringing it to their attention and then start negotiation. It’s that simple!
John P Allen is General Manager of the Veterans Today Network. He is an experienced professioanal negotiator and teacher. He has a B.A. in Finance from California State Unversity at Fullerton. He has been counseling Veterans for over 25 years on financial issues and helps Veterans get Loan Modifications. He can be reached via email at [email protected] or by phone at 1(619) 819-9360