A forensic loan audit has the potential to disclose a variety of lender violations. There are about 80 different laws - federal, state, and local - that lenders must comply with when underwriting a mortgage loan. If they violate any one of those laws the lender faces a penalty, fine, or forced reimbursement of interest and principle. It could be costly for the lender.
Because the risk is so high for the lender and relatively low for the borrower, getting a forensic loan audit is one of the important things to do when seeking a loan modification. In fact, many lenders may turn you down for a loan modification request if there is no compelling reason to provide one. If you can show them that they’ve violated a law in their underwriting of a loan then that could be enough to get them to the negotiating table.
Once you get the lender to the negotiating them you’ve then got to convince them to give you terms that are favorable to you. Let your attorney do the negotiating. They often have more pull and can point out legal details that the lender’s attorney will hope you’ll miss.
At the end of the day, the goal is to keep your home and make it affordable for you to do so. A forensic loan audit can be an essential tool.
The ECOA - Equal Credit Opportunity Act - forbids lenders from considering race, color, religion, national origin, sex, marital status, or age when a person applies for a loan. They can’t even consider whether or not you receive public assistance. This offers greater opportunities for women who wish to take out a loan for purchasing real estate.
Married women often find themselves in situations where they do not have credit because major purchases are made in their husband’s name. While your creditworthiness may be considered for a loan, the fact that you are a woman without credit history may not.
Single women often have other issues related to credit, but unless there is a real compelling reason to deny you a loan based on your creditworthiness, the fact that you are a single woman cannot be used against you either. Nor can your marital status or gender be used to increase the terms of you credit. A loan audit can reveal such instances if they exist in your loan and can save you from foreclosure if there is evidence of such dealing with your lender. Consult an attorney before you do anything else and request a loan audit.
It is important to understand your rights according to the Equal Credit Opportunity Act (ECOA). When the law says “adverse action” it means:
(6) For purposes of this subsection, the term “adverse action” means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. Such term does not include a refusal to extend additional credit under an existing credit arrangement where the applicant is delinquent or otherwise in default, or where such additional credit would exceed a previously established credit limit.
That’s straight out of the Equal Credit Opportunity Act itself.
In other words, a lending institution cannot do any of these three things:
- Deny or revoke your credit
- Change the terms of existing credit
- Or refuse to grant credit on the terms you’ve requested or for the amount that you requested
based on race, skin color, religion, or another protected class under the ECOA law. However, if you are delinquent on a loan and you are refused credit for a certain amount or for certain terms, denied credit, or experience another adverse action due to your delinquency, it doesn’t matter what class or category of person you are. The lender does not have to approve your loan application.
Therefore, it is important for you, if you are challenging a loan request denial or other adverse action under ECOA, you need to make sure that you follow the terms of your loan or you may lose your case.
If you think your lender may be in violation of your loan agreement you should seek a qualified loan auditor today.
One of the most misunderstood aspects of real estate law is ECOA - Equal Credit Opportunity Act.
A lender is in violation of ECOA if any of the following is true:
- A loan was refused on the basis of race, color, religion, national origin, sex, marital status, or age
- A loan was refused because a part of the applicant’s income was derived from public assistance
- A loan was refused due to an applicant exercising a right in good faith under the Consumer Credit Protection Act
Of course, you have to understand that just because a loan was refused it doesn’t mean there is discrimination. If an applicant can’t pay for a loan then he or she will likely not win an ECOA case.
But, in certain situations, it’s OK for a creditor to inquire about marital status or age. Simply asking for this information does not constitute discrimination. But there has to be a real reason for asking. If you think that you may have been discriminated against, you can ask your loan auditor for a document review. The details will be in writing.