Now more than ever borrowers need leverage to negotiate with their mortgage holders, get their loan terms modified, or stop foreclosure in its tracks. Conducting a forensic mortgage audit is the first step to obtaining that leverage. Some loan auditing companies estimate that as many as 83% of mortgages have violations and, with respect to adjustable rate mortgages, errors in ARM payment and rate calculations occur in approximately one-third of all ARMs, particularly if the loan was obtained between 2000 and 2007.
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.