You don’t have to be told the truth.

The world is not going back to the way it was.  Millions of Lawyers, accountants and other professionals have been feeling the severity of the credit crunch.  Companies are downsizing and if you don’t pull in business, you don’t have a seat at the table.

We can thank the subprime crisis for this.

But…there’s light at the end of the tunnel.  There is a fix for you, and there is something that you can do to take advantage of the Fear, uncertainty and doubt in the marketplace.  

That’s this:  Forensic Mortgage Audits.  You can do meaningful work, you can get clients, and you can help people while making money in the process.   Millions of people are going to be at risk to lose their homes especially now that the foreclosure moratoriums are set to expire.

They need legal representation.  They can afford legal representation because at the moment, they are not paying their house payment and that money is freed up.

We’ve created a turn key system that gives lawyers, accountants and other high end professionals EXACTLY what they need.

My name is Suze Spencer, and I’ve been litigating with banks over the last 10 years.  I’ve litigated literally thousands of mortgage case.  I’m sharing with you EXACTLY what you need to do to represent your clients and secure a loan modification.   This graduate level workbook has everything you need to know to:

• Audit loans
• Secure loan modifications for clients
• Get bank guidelines for loan mods
• Ensure loans were processed legally and accurately.
• Acquire clients for your services.

All of this is yours for $179 when you become a client of FMA Secrets.

So what exactly is a forensic mortgage audit (“FMA”)?  An FMA is a comprehensive and detailed review of all loan documentation and lender conduct to uncover any lender law violations.  The purpose of an FMA is to open the door to loan modification, debt forgiveness, stopping foreclosure, and/or money damages from the lender.

A complete and accurate loan audit is an essential weapon in the borrower’s arsenal.  It allows attorneys and others to better advise their clients and help them stay in their homes.
With knowledge of the specific violations of law contained in the mortgage documents, the borrower (and his or her advocate) has the power to demand a response from the lender, and, perhaps, to rescind the transaction in its entirety, get all of the money paid by the borrower back, obtain monetary damages, and/or stop the foreclosure process.

At a minimum, letting the lender know that you know what is wrong with the loan documents opens the door to true negotiation and, hopefully, better loan terms and/or forgiveness of the debt outright.

Getting an FMA from an outside auditing company can be expensive: about $1000 for one loan.  Loan audits can also be done in house or by anyone with proper training and reference materials.

It looks like a combination of New Jersey statutes with certain language which - naturally - lenders are now lobbying the legislature to change.  In the meantime, though, borrowers have a chance.  It doesn’t look like the defense has been around long enough for the New Jersey Supremes to have weighed in on it yet, so go for it while you can.

The defense goes something like this:

New Jersey’s Lender Liability Law states: “A person licensed as a mortgage broker, incidental to the brokering of a first mortgage loan transaction, shall have the right to charge only the following fees: (1) application fee; and (2) discount points.”

“Discount points” are defined as points (or 1 percent of the mortgage) “paid for the express purpose of reducing, and which result in a reduction of, the interest rate” of a mortgage.

So, any payment made by the borrower (either directly or withheld from the proceeds of the loan) to a mortgage broker beyond an application fee and discount points, i.e. a fee that actually results in the reduction of the mortgage interest rate, would be illegal.

The payment by the lender of illegal fees to mortgage brokers out of the borrowers’ funds would, under New Jersey’s Consumer Fraud Law, void the transaction.  Without an enforceable mortgage, there is no right to foreclose.

I like to give credit where it is due, so I’ll tell you the lawyer who appears to have taken the lead on this defense, and has asserted it on behalf of several New Jersey homeowners (results pending), is Joshua Denbeaux.  Mr. Denbaux has been credited with saying that about 50,000 foreclosures will be filed in New Jersey this year.  Of those, more than 30,000 were based on mortgages closed within the last three years, which means they can still be subject to legal challenge. Three-quarters of those, he says, had fees paid by lenders to brokers out of the borrowers’ money.  (Source: Blog.nj.net)

Over the next few weeks, we will be looking for statutes in other states similar to the “discount point” provisions of New Jersey’s Lender Liability Law and will share whatever we find.  If your clients paid discount points without getting a reduction in interest rate, there is hope!

From The Associated Press, April 3, 2009:

A real estate tracking service says the number of homes being repossessed in New Jersey jumped 53 percent to 1,294 dwellings during the first two months of this year compared with the same period last year.

. . .

The problem is intensifying because thousands of adjustable rate mortgages that were issued at the height of the housing boom are beginning to tick over to higher loan repayment rates. The adjustable rates are a hallmark of subprime lenders, who used them to get people into homes they might not otherwise have been able to afford.

The city already has 2,500 homes in various phases of the foreclosure process. Newark officials estimate that 2,258 adjustable rate mortgages, which typically begin with low rates, are set to move upward in December.

Subprime borrowers are most in need.  Luckily, the majority of subprime loans contain errors, omissions, or violations of TILA, HOEPA, or other federal and state laws.  That means that, with proper legal representation and a thorough loan audit to uncover violation, there is hope for these borrowers.  Particularly if the loan is a federal “high cost” mortgage (which subprimes are likely to be), the borrower has an arsenal of legal remedies that a well informed lawyer can pursue.

With record numbers of subprime foreclosures, come record numbers of folks in need of the services of qualified and informed professionals knowledgeable in lender liability law.  Become one.

From the Chicago Tribune, April 30, 2009:

The downturn is a new experience for many lawyers at the top 100 firms. Since the early 1990s, they have grown used to steady increases in revenue and profits. The increases accelerated between 2003 and 2007, fueled by surging demand for lucrative work in the corporate and finance sectors and annual rate hikes.

But the bursting of the housing bubble and the ensuing credit crunch have brought an abrupt end to the golden age for corporate lawyers.

More evidence that our profession is changing.  There is no safety net in the big firms any more.  Even those that are still making partners and hiring associates, are stripping equity or cutting loose low-earning existing partners, so growth remains flat.

At this point, unless you’ve been under a rock somewhere, you know what’s happening out there.  You don’t need another dismal report to tell you that your own profit margins have disappeared.  Take control.  Re-tool.  Find out what folks need the most right now and deliver.  The housing bust has taken away a lot of opportunity, but also has provided some.  Learn to help the real victims of the crisis: the borrowers stuck paying for “toxic assets” lenders have erased from their books.  Learn how to audit loans, represent borrowers in foreclosure, negotiate loan mods with banks.  Whatever it takes to prepare yourself for the post-bust world and control your own destiny.

Remember: Loan audits can be brought in house.

Mortgage lenders have boosted their foreclosure-prevention efforts, but homeowners nonetheless are increasingly falling into delinquency even after receiving help on their loans, according to a government report issued yesterday.

The report, by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate mortgage lenders, illustrates the challenges facing industry and government and government efforts to tackle the foreclosure crisis. Foreclosure rates are expected to continue to increase as the economy falters and the labor market weakens. It could take months for the Obama administration’s prescription for the foreclosure crisis to begin to have an impact.

Looks like the banks are still not stemming the rising tide of foreclosures, and that more than ever, borrowers need strong advocates in negotiating terms with the bank.  Even modified loans are failing.  Once modified, though, any defenses the borrower had to the original loan, such as TILA, HOEPA, RESPA, or other violaionts, that may have given the borrower the right to rescind the original loan or to get money damages against the bank, are waived.  That means the borrower is sitting with a modified loan that he or she still can’t pay and now has none of his or her original defenses to the original loan.  Now more than ever it is essential that anyone negotiating loan modifications or representing borrowers in distress know what rights the borrower has before modifying the loan.  Once modified, those rights are likely gone for good.

Remember:  Audit your loan to know specifically what is wrong with it before signing off on any loan modification.