Mortgage frauds committed by the lenders are not very rare in the country. Over the past few years, reports of mortgage lenders committing frauds have come to the fore on many occasions. Given the rise in mortgage frauds committed by the lenders, the idea of forensic mortgage audit has emerged out. A forensic mortgage audit covers a comprehensive review of all loan documents. This checks for the illegal activities performed by the lender, broker or anyone involved in the loan process. Here, qualified auditors audit all the documents that you receive from the lender during the entire loan process. The forensic auditors decide whether the loan offered by the lender meets all legal criteria. Anyways, a forensic mortgage audit can offer several benefits to the homeowners and helps them avoid various mortgage related frauds. Here are some reasons why a forensic mortgage audit helps a homeowner avoid frauds -
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A forensic mortgage audit is conducted by an independent third party. Neither the lender nor the homeowner can have any influence on the audit of the third party. The third party is involved in the determination of any fraud or unlawful practices in the loan process.
- Loans offered by the lenders should not breach the legal boundaries. Violations of the law are strictly punishable. In the event of loan violations, lenders may have to face serious legal consequences.
- A mortgage lender is a businessman after all. A lender will lose more money in case the lender allows a homeowner a loan modification program. Lender has the chance of making more money in foreclosure than allowing a loan modification. So, quite naturally, lender will try to reject your loan modification request. But in case you find any evidence of loan violation by the lender, then you have better chance of getting your loan modification request accepted by the lender.
- If the mortgage audit finds that the lender has resorted to some unlawful activities, then the homeowner has to be compensated. The compensation package may include refund of the principal and interest payments of the past 3 years, refund of the closing costs. Sometimes, a loan modification or renegotiation of the terms and conditions of the mortgage may also be offered.
The independent auditor tries to find out any kind of frauds in the loan process. The auditor looks for these irregularities in the loan -
- The mortgage business is governed by several local, state and federal laws. An independent auditor checks out whether the loan offered by a particular lender conforms to all these local, state and federal regulations.
- There might be improper or excessive fees or there may be some abusive or predatory lending practices followed by the lender. An auditor tries to detect these unlawful practices.
- Lender must follow the terms and conditions as agreed upon. A mortgage auditor finds out whether there is any breach of contract or not.
- An auditor detects whether there is any negligent mis-presentation or frauds in the loan process or not.