ForensicLoanAuditManual

Introduction ThisManualisdesignedtogiveyoua basicunderstandingof Forensic LoanAudits,andthebasicsof uncoveringviolationswithin yourmortgageloan.

Whatisa ForensicLoanAudit? AforensicLoanAuditis anauditonloandocumentationtouncover violationsanderrors. Itis anextensivecomprehensivereviewandinvestigationinto the homeowners/borrowersexistingloan.

Themaintypesofviolationsareasfollows.

GoodFaithGuidelineViolations Borrowerapprovedforloantheyarenotabletorepay TruthInLendingViolations RealEstateProcesuresActsViolations NoNetBenefittoBorrower

Ifthereis oneofthesetypesofviolationsintheloanaudit,thereisa very highchancealoanmodificationcangothroughandevenresultinthe repaymentofinterestbackto theborrower/homeowner.

Belowisamoredetailedexplanationofspecificviolations. 1.Truth-In-LendingAct(TILA)Violations InaccuratereportingofAPRandfinancechargecalculationsonborrower disclosures.Calculationerrorswhichoccurasadirectresultoffailingto includeoneormoreprepaidfinancechargesinthecalculations,incorrect disclosedfundingdates,orlast-minutechangesmadetoloanby the settlementagentatthe closingtable.Ifitunderstated,thelenderisin violationofthefederalTruth-In-LendingActaswellasmanystatelaws prohibitingsuchactions.Lenderrequiredtoreimburseborrowerforthe difference,andmay besubjecttostatutorydamages,administrative sanctions,loanbuy-backs,andlawsuits.Inaddition,therescissionperiod mayreopen,creatingadditionalriskforthelender.

2.Anti-PredatoryLendingViolations ThesearerelatingtoConsumerProtectionlaws. Violationsusuallyoccurbecauseofthe misunderstandingofhowthey work.Examplesofviolationsincludefailingtoincludefeessuchasyield spreadpremiumsinthe calculationsorusinganincorrectloanamount valuetoperformthecalculation.PenaltiesVarybyeachlaw.Theusual costsincludeborrowerreimbursements,statutoryandpunitivedamages, attorneys¶fees,administrativefinesandpenalties,loanbuy-backsand reformation,andclass-actionlawsuits.

3.StateLawViolations Examplesincludeillegalprepaymentpenaltyclauses,ratesthatare usurious,orfeesthatarenotallowedtobecharged.Somepenalties includeactualdamagesandcosts,attorney¶sfees,administrativefines andpenalties,loanbuy-backs,andclass-actionlawsuits.

4.ReverseMortgageViolations²Theseviolationsincludeviolations relatingtoreversemortgageobtained.Someviolationsincludefailingto disclosetheAPR,, andprovidingincompleteorimproperdisclosures.

5.RealEstateSettlementProceduresAct(RESPA)ViolationsRESPA prohibitionsputlimitsonalender¶sandbroker¶sabilitytochargeorpay feesthatarehiddenfromtheborrower.Violationsinclude,accepting kickbacksorreferralfees,upchargingforservicesprovidedby3rdpartiesparties, andchargingforservicesnotperformed. Penaltiesincludeactualdamages,administrativefinesandclass-action lawsuits. Inaddition,otherviolationsincludelendingwithoutprovidingborrowers areasonable,tangiblenetbenefit,state-specificdisclosureerrors, servicingviolations,FairLendingviolations. CONSTRUCTIVEFRAUD Materialfactsrelatingtotheloan,whichincludetermsoftheloan.Prepayme ntpenaltyorany informationwhichaborrowermustknow beforeloanisaccepted.Werethesefactsnot properlydisclosedto theborrower.Weretheymentionedatall?

FRAUDANDNEGLIGENTMISREPRESENTATION Thisisbasicallyanystatements,comments,andrepresentations writtenororalbythebroker,loanofficer,notarywhichin anyway contradictedthetermsoftheloandocuments.

NEGLIGENTMISREPRESENTATION Ifabroker/loanofficerswhichworkedontheloanmakeserrors whichresult inmisrepresentation,thisisclassifiedasnegligentmisrepresentation.

BREACHOFCONTRACT Anytermsinthecontractofthenotethelenderfailedtofollow?Such asthewaythe interestiscalculated,andthe penalties.

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