It helps, if you want to win a case, to know the definitions of the terms you are going to use. A wise man once said, he who defines the terms controls the conversation. Well, to better understand what a loan violation is, you have to understand the case law behind lender practices and know what is permissible. But even then, just knowing the law isn’t enough. You also have to search out the documents that law pertains to.
A forensic loan audit is the only sure way to know where loan violations are within a mortgage document. Most of the violations that occur in a loan will be in the closing documents. That means you need three things:
- The borrower’s copies of mortgage documents
- A list of all applicable laws and associated penalties
- A loan auditor to review the documents and analyze them to identify the violations
A professional loan auditor will perform a comprehensive document review and outline all the problem areas in the loan. If there are any loan violations then the forensic loan audit will uncover them. A reputable loan auditor will refund your money if no violations are found. You can’t beat that.
If you are a loan modification attorney it can get frustrating approaching a lender to request a mod on behalf of a client and being turned down. Worse yet, getting turned down and with no good reason offered. You have to go back to your client and deliver the bad news.
However, 83% of US loans are frought with lender violations of one applicable law or another. TILA, RESPA, HOEPA, a state law, ECOA, or one of over 80 laws that can be violated. Many of these violations provide your client with a right to rescission of their loan. Instead of facing foreclosure, your client could instead turn the tide of negotiation in their favor. And you’ll be hero.
It all begins with a loan audit. That’s where you can see if there are any violations of your client’s loan. Your loan auditor will provide you with a comprehensive report, detailing missing documents or other violations of your client’s loan and an analysis of what it may mean to your client financially and legally. Click the link to view a sample loan audit.
Your loan auditor can provide a comprehensive report and help you identify areas that are key negotiating points in the loan modification process. Get more information on the loan auditing process.
When you are challenging the terms of your mortgage you want the best of two things: An attorney and a loan auditor. At least one of them should be a case law expert.
I am utterly surprised by the number of loan auditors today who couldn’t answer simple questions about mortgage case law. A good loan auditor will be thoroughly familiar with the Truth In Lending Act, HOEPA, RESPA, ECOA, and many other local, state, and federal laws that apply. Of course, your local laws will be different than those in another state, but your loan auditor should know where to go to find the most applicable laws.
Many lender violations can result in fines and penalties for the lending company. That’s why, if you have evidence that some of those laws were violated, even if by innocent error, it could save you thousands of dollars over the lifetime of your loan. Your payments could get lowered as well.
And since 83% of mortgages have violations in them, it makes sense to get a loan audit - just so you can sleep at night.
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.
TILA stands for truth in lending. It’s a piece of legislation put in place to protect consumers from predatory lenders who prey on consumer ignorance and borrower innocence.
The part of the Truth in Lending Act that is cited most often and which affords the latest and most protection for borrowers is Part 226, also called Regulation Z. This is the part of the act that requires lenders to provide certain disclosures and gives the time line for those disclosures based on the type of loan.
For instance, Part 226.5b says in part:
(d) Content of disclosures. The creditor shall provide the following disclosures, as applicable:
(1) Retention of information. A statement that the consumer should make or otherwise retain a copy of the disclosures.
(2) Conditions for disclosed terms. (i) A statement of the time by which the consumer must submit an application to obtain specific terms disclosed and an identification of any disclosed term that is subject to change prior to opening the plan.
(ii) A statement that, if a disclosed term changes (other than a change due to fluctuations in the index in a variable-rate plan) prior to opening the plan and the consumer therefore elects not to open the plan, the consumer may receive a refund of all fees paid in connection with the application.
(3) Security interest and risk to home. A statement that the creditor will acquire a security interest in the consumer’s dwelling and that loss of the dwelling may occur in the event of default.
(4) Possible actions by creditor. (i) A statement that, under certain conditions, the creditor may terminate the plan and require payment of the outstanding balance in full in a single payment and impose fees upon termination; prohibit additional extensions of credit or reduce the credit limit; and, as specified in the initial agreement, implement certain changes in the plan.
Subsection d of this part of the code contains 12 specific instructions to lenders that must be complied with or the lender is in violation of the loan agreement. All 12 must be adhered to, if applicable. Other items not mentioned above include:
- Disclosures for variable-rate plans
- Tax implication disclosure
- Transaction requirements
- Negative amortization disclosure
- Third-party fees disclosure
- Creditor fees disclosure
- and APR disclosure
All of this can be found just within one small part of Regulation Z. You can read the entire regulation on the FDIC website.
To learn more about how a loan audit can help you uncover lender violations - either a violation of Regulation Z or one of the many other state, local, and federal laws that apply - visit one of the oldest and most comprehensive loan auditors in the nation.
During the loan document review there are a number of documents that your loan auditor will be concerned with. Obviously, your loan closing paperwork is the first place to start and that’s where the majority of the information you’ll need for an equitable loan settlement will be found. But there are supporting documents that will be helpful. Some of those include:
- Good Faith Estimate
- Truth In Lending Statement
- Verification of Employment
- Verification of Deposits
- Verification of Mortgages
- Tax Returns
- Bank Statements
- W-2s
- Credit Reports
- Real Estate Appraisals
- Title Commitment
That’s just to name a few. There are over 30 different documents that your loan auditor may be concerned with to help you identify areas for renegotiation with your loan. Your lender will not help you find the information. That’s why it is important to have a good relationship with your loan auditor, who is a third-party individual or business with no interest in your loan. He is there to make sure you get a fair shake in the loan. Who else is doing it?
Get more information on the Loan Document Review.
Welcome to Loan-Auditors.com. This blog is dedicated to sharing the best and most up-t0-date information on the loan auditing process and its benefits. If you are an attorney with clients in need of pursuing a loan settlement or ensuring that their mortgage company is playing by the rules then you’ll definitely want to bookmark this blog and subscribe to its feed.
Are you a homeowner or real estate agent? You might find this information helpful as well.
A loan auditor is a person who looks at a mortgage contract and seeks to find any evidence of lender violations. He must be familiar with the appropriate local, state, and federal laws relating to TILA, RESPA, HOEPA, and mortgage lending practices. A forensic loan audit goes over a mortgage contract with a fine tooth comb seeking violations that can help a homeowner save their credit, avoid foreclosure, and renegotiate the terms of their mortgage.
This blog will share information on the following topics to anyone interested in the loan auditing process:
- Structured settlement
- Expert testimony and expert witnesses for mortgage litigation
- Holder in due course
- Forensic audit used in court
- Foreclosure case law
- Truth in lending laws
- Truth in lending statutes
- RESPA laws
- RESPA statutes
- Motions for summary judgment
- Motions to dismiss
- TRO - Temporary Restraining Order
- Motions for injunctive relief
- Mortgage securitization
- Lost note affidavit
- Sample RESPA demand letter
- Sample RESPA non-compliance letter
- Formal complaints
- CLE credits
- CLE credits on real estate law
- CLE credits for mortgage law
- Common law torte used in foreclosure defense
- Forensic Loan Auditing
- Mortgage Fraud Investigators
- Mortgage Audits
If any of these topics interest you or your clients then come back to Loan-auditors.com often and leave us a comment. For more information on loan audits or the loan auditing process, visit USLenderAudit.com.