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 | Truth In Lending Violations Audit |
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Questionable Mortgage?
Nearly EVERY residential mortgage loan has TILA and/or RESPA violations which can be used as leverage in negotiations such as Loan Modification or Short Sale Pay-Off. Or, moreover the violations can be litigated...a result of which may be SUBSTANSIAL DAMAGES due to the borrowers.
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VIOLATIONS found in the Forensic Loan Audit ReportSM can be used to help:
- STOP FORECLOSURE
- MEDIATE
- SHIFT VENUES FROM NON-JUDICIAL
TO JUDICIAL PROCEEDINGS
- CANCEL A MORTGAGE
- RESCIND A MORTGAGE
- SEEK DECLATORY RELIEF
- STOP BANKRUPTCY
- RECEIVE REFUNDS
- REDUCE MORTGAGE
- REDUCE PAYMENTS
- And More...
DEFINITIONS of the word "Audit":
- A systematic, independent and documented process for obtaining evidence.
- A formal examination of an organization's or individual's accounts or financial situation. An audit may also include examination of compliance with applicable terms, laws, and regulations.
- The physical review of practice records to determine if the practice has been (and is being) compliant with carrier requirements.
Why the need for the U.S. Lender Audit?
Most of the reasons begin at the underwriting and origination level, according to a new survey performed by Bank Director magazine.
Conducted late last year (2008), the survey asked 339 senior executives from various banks and savings institutions to choose up to three causes of the credit crisis from a list of 10.
More than half of the respondents chose "lax underwriting standards" as the primary cause of the current debacle, according to the 16th Bank Executive Survey conducted by Gary Thornton, as reported by MortgageDaily.com.
Next to lax underwriting standards, 46 percent blamed "political emphasis on increasing homeownership," followed by "lack of oversight of the mortgage industry" chosen by 44 percent of the bankers. Forty percent said the credit crisis was due to "inadequate understanding of risks" while 39 percent chose "lack of oversight of Fannie Mae and Freddie Mac." Three other choices including "credit default swaps," inappropriate or aggressive commissions for mortgage brokers" and "interest rates kept low for too long," each were chosen by 18 percent of the respondents and 15 percent said "use of the fair value accounting standard."
This survey suggests the lending industry is fully aware that many loans, perhaps undeservingly so, were qualified. And at the political urging of those with authority.
These causes are reasons why a mortgage audit should be performed, to ensure the loan originator didn't take advantage of the borrower. And this also explains why almost 100% mortgage loan audits result in the detection of serious violations. Lender violations that can be used as a leveraging tool in mediation and more. And, if we don't find and report SEVERE that may be used as leverage, U.S. Lender Audit will provide a 100%, no questions asked, full refund! No other service compares!
VIEW VIDEO! CLICK HERE! Another U.S. Lender Audit Sample Forensic Audit CLICK HERE!
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"Three million homeowners with subprime loans are anticipated to enter foreclosure during the next two years, and 2 million of them are forecasted to lose their homes. Another 40 million homeowners will see their home values decline by $200 billion due to nearby subprime foreclosures." -May 07,2008 Center for Responsible Lending
Sample Forensic Mortgage Compliance Audit
U.S. Lender AuditTM gives the borrower a fighting chance, providing FACTUAL findings that may be used help alleviate borrowers from the loan's obligations, even if only partially. A reduction possibility exists when violations are found. Lenders eager to cover up wrongdoing are likely to offer modifications that include clauses releasing themselves from liability and removing all of the borrower's defense, claim, counter claim, or any other defense against the lender should a lawsuit or foreclosure occur. Consult with your attorney for details. Protect your rights! Consider our forensic loan audit before you sign on the bottom line for any such loan modification. Know why the HOPE NOW program along with the Emergency Economic Stabilization Act of 2008, "the $700 Billion Bailout" could be the greatest cover up to the improper events and violations that the lenders don't want you to know! Consider our 100%-money back guarantee.
The penalties for failure to comply with the Truth In Lending Act can be substantial. A creditor who violates the disclosure requirements may be sued for twice the amount of the total finance charge on the loan. In the case of a home mortgage, this can be a very significant amount. Costs and attorney's fees may also be awarded to the consumer. A lawsuit must be begun by the consumer typically within three years of the violation, but certain tolling provisions, including consumer laws, and the absence of specific material disclosure, may apply giving the consumer more time.
The Truth In Lending Act ("TILA") and the Real Estate Settlement Procedures Act ("RESPA") are violated daily by lenders and mortgage companies. These laws are in place to protect you, the homeowner, but they are often completely disregarded. Your loan is probably unlawful, and you may be entitled to substantial damages whether or not you're currently in foreclosure.
Have Questions? Click Here! Homeowner FAQ
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If specific violations pertaining to Truth in Lending apply to your mortgage, they may be used to immediately stop the foreclosure process (if you currently are in foreclosure), but it also could when used successfully, could assist in avoiding bankruptcy and may puts money in your pocket, as well as your attorney. Once TILA and/or RESPA violations are discovered in your loan documents, your lender may be very eager to discontinue the unlawful foreclosure process and settle the dispute.
Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions or any such questions as to the possibility of fraud or validation of debt), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer's required payment.
A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6's provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.
The Lender will have 20 business days per the Real Estate Settlement Procedures Act (RESPA) to respond to the written request and 60 business days to try and settle this matter. In the event the Lender does not act within the timeframe's listed above, you may file "Documented Mortgage Complaints" to all appropriate local, state and federal regulatory agencies, as the servicer would be in serious default!
Have Questions? Click Here! Homeowner FAQ
CLICK HERE to Get Started
Another U.S. Lender Audit Sample Forensic Audit CLICK HERE!
Protection of Credit Rating
During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15).
What Lies In Your Loan?TM Find out by ordering an Audit!
Call us today to get started.
When Does a Borrower Have a Right to Rescind a Residential Mortgage?
The general rule is that a borrower whose loan is secured by his or her principal dwelling has the right to rescind, unless the loan is not intended primarily for personal family purposes or the loan is a purchase money loan. 15 USC §1635(f). There are, effectively, two separate rights to rescind. The first is the three-day right to cancel, which can be exercised by the borrower during the three business days after the loan documents are signed. During this three-day period, the lender should not release loan proceeds or record the security interest. This three-day right to cancel ends at midnight on the third business day after the loan documents were signed. A business day is Monday through Saturday, with certain holidays excluded.
VOID CONTRACTS. CANCELLING A MORTGAGE!
The second right to rescind is the extended right to cancel. The statute of limitations on this extended right is three years; however, it can be tolled for certain reasons, and more importantly, a borrower can always rescind, if the loan is rescindable, if the lender starts foreclosure proceedings. However, many FRAUDs have no statute of limitations, which based on the Statute of Frauds in your state, the actual breach of contract and misrepresentations may call for outright Cancellation!
Under TILA, the extended right to rescind is created when the borrower is not properly notified of the three-day right to cancel or the TILA disclosures are not accurate within certain statutorily defined tolerances. However, today's changing environment may call for different approaches to best outcomes. Bringing an original action or claim, or cross-claiming may be your best bet in a non-judicial foreclosure proceedings, when using Federal and/or State Violations depicted from first hand evidence. Additionally, in judicial foreclosure proceedings, you may seek additional discovery and arm yourself better using the evidentry items found.
Prior to ordering, you may want to consult with an attorney first to order your audit, depending on your delinquency status. If you do not have an attorney, please let us know, and we may be able to assist you with a completely free consultation and evaluation with an attorney in your area before and after your audit is completed. You and your attorney will additionally receive support from our administrative staff.
Sample Forensic Mortgage Compliance Audit
Have Questions? Click Here! Homeowner FAQ
CLICK HERE to Get Started
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83% of Mortgages Have Violations.
Know the Facts!
Facing Foreclosure?
Lender at Fault?
Mortgage Violations?
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ACTUAL AUDITOR NOTES:This is a Hybrid Option Arm loan that allows 120% negative amortization. The servicing
disclosure was in the file, however, the initial Good Faith Estimate and the initial Truth in
Lending disclosures were not in the supplied documents. As all three of these documents are
required to be disclosed to the borrower within 3 days of the application, there is some
evidence that this may not of occurred. Additionally, this loan allowed a negative amortization
that would bring the loan balance to exceed the appraised value.
ACTUAL AUDITOR NOTES: In section One of the Note "1. BORROWER'S PROMISE TO PAY" the principal amount was blank. This would indicate that there is no consideration provided for this loan. The documents
provided included a "Limited Power of Attorney" to correct paper work mistakes. However that
POA excludes changes in the loan amount or terms.
ACTUAL AUDIT NOTES:The audit report produced a number of loan exceptions. Most of the exceptions were produced
because of the limited number of documents provided in the audit. This was a stated income
loan. The application provided show the previous housing expense at $2600.00 and the new
housing expense over $9000.00. This payment shock is unacceptable without some
explanation by the underwriter as to how the borrower was to meet this obligation. This loan
should not have been made.
ACTUAL AUDIT NOTES: This transaction was a ten year interest only First Lien Mortgage Loan. The amount of the loan was $279,500.00. This amount is within the conventional limits and is covered by the State or Federal Home
Ownership Equity Protection Act.This loan was made for a new home built by Lennar Homes. Lennar Homes
also owns the loan origination company, the lender and the title company used in this transaction.
The documents provided did not include a notice of Affiliated Business Disclosure required when two or
more of the participants rendering services on a home mortgage are related by ownership of 1% or
greater.
Controlled and Affiliated Business Arrangements (ABA)
An "affiliated business arrangement" (ABA) or Controlled Business Arrangement is defined in RESPA as
an arrangement where a person who refers settlement services has an "affiliate relationship" or "an
ownership interest of more than one percent in a provider of settlement services."
Why an ABA not disclosed a RESPA Violation
HUD tacitly understands that there are circumstances where a borrower's interests are best served by
working with entities who "bundle", or package, services. If the process results in lower costs for the
borrower, it is obviously advantageous to use a provider who can add value. For HUD, the concern is in
areas where the borrower ends up paying more, not less, for services. The Controlled Business
Arrangement is a circumstance where, if unmonitored or unregulated, borrowers could be steered to a
provider which does not add value, but adds cost, where upon in this circumstance both the loan
originator and the lender charged origination fees causing a higher cost to the borrower.
This transaction violates RESPA 3500.15
ACTUAL AUDIT NOTES: The borrower's did not show on their application sufficient funds to close the loan. There is no
explanation for the additional funds. The payment shock on this loan was three times the
amount that the borrower had been paying. This in addition to the poor payment and credit
history of the borrower, made this a questionable loan and the lender should not have made
the loan.
ACTUAL AUDIT NOTES: This is a 30 year adjustable rate mortgage amortized over 40 years with a balloon payment at
the end of 30 years. The HUD-1 provided in the review was changed and "penciled in" without
any acknowledgment by initialing by the borrower. The review package also included only one
copy of the borrower Right to Cancel. Two copies are required by the TILA law. Additionally,
the GFE estimate provided at closing indicated the loan term was 480 months with and
amortization period of 480 months. This was wrong as the term was 360 months and
amortization period of 480 months. The fees charged by the broker were excessive and are
indicative of an loan transaction provided to benefit the broker over the needs of the borrower.
ACTUAL AUDIT NOTES: This is a 3/27 adjustable rate loan that refinanced with cash out a previous
loan that had only four months of seasoning. The borrower had good credit with a mid score of 717.
While legally permitted, this loan had excessive broker fees ($14,700.00) and the borrower could have
possibly qualified for a fixed rate product with a similar interest rate and loan terms with lower
fees. The broker would have difficulty passing the RESPA test for justifying the work that the
fees represented.
ACTUAL AUDIT NOTES: The Notice of Right to Cancel was not completed. The notice did not have a rescission date. This loan may be rescinded.
ACTUAL AUDITOR NOTES: The file contained only three copies of the "Borrower's Right to Cancel", there should have
been four copies or two copies for each borrower. The loan was originated by the borrower as
the borrower was a loan officer for the lender. This is not an industry "good practice" and
should have not been allowed. The borrower also provided a letter to the lender detailing the
reason for the refinance. The letter claimed the borrower wanted to replace their adjustable
rate mortgage with a fixed rate mortgage. This was a refinance of an adjustable rate mortgage
with a new adjustable rate mortgage. As the cost of the refinance was going to increase the
overall housing expense, it is difficult to understand how there would be a "net tangible
benefit" to the borrower.
ACTUAL AUDITOR NOTES:
This was a re-finance of an existing mortgage loan. The Right of Rescission or the Right to
Cancel provided in the file did not have a rescission date. Additionally only one copy was
provided. Under the TILA law, in a consumer refinance transaction, two copies of a disclosure
of Right of Rescission, disclosing the process and the date in which the borrower must exercise
that right, must be given to each borrower at closing. Based upon these documents, the TILA
law was violated and the borrower can rescind the loan. There is a Failure on the HUD-1 as
both the originator and the lender charged processing fees. It is sometimes common to see the
lender charge a small document review fee, but this was not the case. The deed of trust has
the borrower as a married woman. California is a community property state and the spouse
should have a right of rescission disclosure. This was not in the file.
The file contained only one copy of the right of rescission. The copy was not complete. It failed
to show the date of the transaction, or the date of the truth and lending disclosure or the date
of receipt of the Right to Cancel Notice. It also failed to show the date by which the rescission
period expires. Additionally, because California is a community property state, there should
have been two notices for each borrower or both married individuals. The application did not
indicate the borrower income, this would indicate a high level of irresponsibility on the part of
the lender as this would mean the lender accepted the borrower with no income.
The borrower was not qualified at a higher interest rate.
The borrower's interest rate, currently, and at the time of Application is 7.500%.
Debt-to-income ratio is very high at 7.500% and can increase to 10.500% in June
2009, and can increase 1.00% each year thereafter. The borrower was not
qualified for the interest rate ceiling of 13.500%.
The Adjustable Rate Mortgage Note includes inconsistent
mortgage terms.The loan documents indictate that the interest rate will adjust annually based on
a 6-month LIBOR index. Based upon industry standards and accepted practices,
the index should match the frequency of the interest rate adjustments, in this
case, the index should be a 1 year LIBOR.
It appears that the borrower was charged excessive fees at
closing. For each loan, the borrower was charged 4% for origination fees on the HUD-1
Settlement Statement. However, on the Good Faith Estimate, the 4% total fees
included origination fees, discount fees, and mortgage broker fees totaling 4%.
The HUD-1 does not differentiate the individual fees from the origination fees.
Mortgage Affordability Estimates-This was estimated by using the income stated on the
loan application.According to this estimate the borrower could afford to purchase a house
valued at $245,531 at the initial rate of 7.500% and a house valued at $159,294 at the ceiling
rate of 13.500%.
Based on the information provided in the file the borrower would need to have a yearly income
of $135,597.28 inorder to qualify for this loan. The borrower's income as shown on the loan application
is $9,840.84 per month or$118,090.08 per year.
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