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While a Forensic audit
is also done by one of our Attorney Groups that we are affiliated
with, this type of
audit can be used by even those who could not otherwise qualify for
a loan mod. Loan errors
discovered by this audit can nearly always lead to a full loan
modification. Many have
this done in light of the sloppiness of the mortgage industry over the
last few years. Below are the items that are ordinarily reviewed by a Forensic
Audit.
A Forensic Mortgage Loan
Audits is a careful
examination of certain
documentation
to determine if there were any violations found in the origination
of the loan or subsequent errors in determining payments and escrow
amounts. The analysis consists of evaluating the documents given at
application, at closing (settlement), and after
closing.
ORIGINATION
AUDIT
1. Home
Ownership & Equity Protection Act
(HOEPA)
a. Section
32 (High Cost)-did the points/fees exceed maximum
thresholds?
2. Truth in
Lending Act (TILA)
a. Final
Truth in Lending Statement-was the APR or finance charge
incorrect?
b. Initial
Truth in Lending Statement-was this provided to client within 3
business days of
application?
c. Right of
Rescission Notice (ROR)-was the rescission given to the client
accurate and did
they receive
adequate disclosure?
d. Initial
ARM disclosure-was this provided to the client within 3 business
days of application?
3. Real
Estate Settlement Procedures Act (RESPA)
a. Good
Faith Estimate-was this document provided to client within 3
business days of
application?
Are there any violations on this document?
b. HUD-1
Settlement Statement-Evaluation of the HUD-1 in conjunction with the
TIL and
GFE to
determine accuracy and if any violations
occurred.
c. Transfer
of Servicing Disclosure-was this provided to the client within 3
business days of
application?
4. Equal
Credit Opportunity Act (ECOA)
a. Was the
ECOA provided to the clients within 3 business day of
application?
b. Right to
a Copy of the Appraisal Disclosure-Was this document given to the
client?
5. Gramm,
Leach, Bliley Act (GLB)
a. Privacy
Policy Notice-Was this disclosure provided to our client at time of
application?
6. Fair
&Accurate Credit Transactions Act
(FACTA)
Appraisal
Analysis
a. Was the
appraisal a fair and accurate description of the property value at
time of
origination?
b. Were
values ‘inflated’ and did a specific value need to be given to make
the transaction
work?
8.
Underwriting Analysis
a. Did the
underwriter use reasonable logic in determining if the client could
afford the
payments or
if the loan made sense?
b. Were any
known guidelines exceeded in terms of Debt to Income (DTI), credit
analysis,
program
affordability and potential payment shock?
c. Was the
income that was used ‘reasonable’ and was it
documented?
d. Were
assets (down payment) ‘reasonable’ and were they
documented?
9. Other
Issues
a. Were
there any red flags in the file that would lead to believe that any
type of fraud was
involved?
b. Were
there any exceptions granted in the processing/closing of the
loan?
c. Was the
chain of title accurate and were there any lien
issues?
d. Were
there any state-specific laws that were
violated?
e. In the
end of the analysis, did the lender provide a mortgage to someone
who could
reasonably
expect to repay the debt?
PAYMENT
STREAMAUDIT
1. Did the
lender use the correct information in determining the clients’
payment adjustments for the life of the
loan?
ESCROWAUDIT
1. Did the
lender collect the correct amounts of money from the client to be
used to pay for Real
Estate
Taxes, Homeowners Insurance, and Private Mortgage
Insurance
Feel free to contact us for
further information if you would like to consider having your
mortgage loan audited.
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