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 have an extremely high interest rate on your loan (and there are many reasons why you may, including but not limited to a bad credit score) then you need to become familiar with HOEPA law. This is an extension of TILA and affords extra protections to people with high interest rates or out-of-the-ordinary loan types.
By law your lender is required to send you a HOEPA notice three days prior to your closing date. The notice must tell you that you are not obligated to enter into the loan. The notice must also give you an accurate statement of APR, your monthly and balloon payment (if any) amounts, and if you have a variable rate loan your maximum payment amount. In other words, it should spell out what, exactly, you are getting into without all the legalese.
If you do not receive the HOPEA notice then you are automatically awarded a three year extension on the right of rescission. In addition, if you are due damages then you can be awarded the maximum provided under TILA plus additional amounts under HOEPA. Even then, you are still entitled to certain HOEPA claims beyond your three year extension date. It’s a powerful piece of legislation.
For more information on HOEPA and requesting a loan audit, contact US Lender Audit.