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Forensic Loan Audit Manual Niks

Forensic Loan Audit Manual Niks

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Published by Nikki D White

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Categories:Types, Business/Law
Published by: Nikki D White on Jul 20, 2011
Copyright:Attribution Non-commercial

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11/05/2011

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Forensic Loan Audit Manual
IntroductionThis Manual is designed to give you a basic understanding of ForensicLoan Audits, and the basics of uncovering violations within yourmortgage loan.
What is a Forensic Loan Audit?
A forensic Loan Audit is an audit on loan documentation to uncoverviolations and errors.It is an extensive comprehensive review and investigation into thehomeowners/borrowers existing loan.
The main types of violations are as follows.
Good Faith Guideline ViolationsBorrower approved for loan they are not able to repayTruth In Lending ViolationsReal Estate Procesures Acts ViolationsNo Net Benefit to BorrowerIf there is one of these types of violations in the loan audit, there is a veryhigh chance a loan modification can go through and even result in therepayment of interest back to the borrower/homeowner.
 
Below is a more detailed explanation of specific violations.
1. Truth-In-Lending Act (TILA) Violations
 Inaccurate reporting of APR and finance charge calculations on borrowerdisclosures. Calculation errors which occur as a direct result of failing toinclude one or more prepaid finance charges in the calculations, incorrectdisclosed funding dates, or last-minute changes made to loan by thesettlement agent at the closing table. If it understated, the lender is inviolation of the federal Truth-In-Lending Act as well as many state lawsprohibiting such actions. Lender required to reimburse borrower for thedifference, and may be subject to statutory damages, administrativesanctions, loan buy-backs, and lawsuits. In addition, the rescission periodmay reopen, creating additional risk for the lender.
2. Anti-Predatory Lending Violations
 These are relating to Consumer Protection laws.Violations usually occur because of the misunderstanding of how theywork. Examples of violations include failing to include fees such as yieldspread premiums in the calculations or using an incorrect loan amountvalue to perform the calculation. Penalties Vary by each law. The usualcosts include borrower reimbursements, statutory and punitive damages,attorneys
fees, administrative fines and penalties, loan buy-backs andreformation, and class-action lawsuits.
3. State Law Violations
 Examples include illegal prepayment penalty clauses, rates that areusurious, or fees that are not allowed to be charged. Some penaltiesinclude actual damages and costs, attorney
s fees, administrative finesand penalties, loan buy-backs, and class-action lawsuits.
 
 
4. Reverse Mortgage Violations
These violations include violationsrelating to reverse mortgage obtained. Some violations include failing todisclose the APR, , and providing incomplete or improper disclosures.
5. Real Estate Settlement Procedures Act (RESPA) Violations
RESPAprohibitions put limits on a lende
r’s
and broker
s ability to charge or payfees that are hidden from the borrower. Violations include, acceptingkickbacks or referral fees, up charging for services provided by 3rd partiesparties, and charging for services not performed.Penalties include actual damages, administrative fines and class-actionlawsuits.In addition, other violations include lending without providing borrowersa reasonable, tangible net benefit, state-specific disclosure errors,servicing violations, Fair Lending violations.
CONSTRUCTIVE FRAUD
 
Material facts relating to the loan, which include terms of the loan.Prepayment penalty or any information which a borrower must knowbefore loan is accepted. Were these facts not properly disclosed tothe borrower. Were they mentioned at all?
 
FRAUD AND NEGLIGENT MISREPRESENTATION
 
This is basically any statements, comments, and representationswritten or oral by the broker, loan officer, notary which in any waycontradicted the terms of the loan documents.
 

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