Thursday, November 17, 2011

Is a Mortgage Audit Worth It? Probably Not.

The foreclosure crisis in our country is only about half over, according to the Mortgage Bankers Association.  One estimate is that we are three to four years away from "normal."  That means we still have desperate people, and people willing to part people from their money. 

A new wrinkle has come in: the mortgage audit.  What is this?  It's a thorough investigation of the mortgage for legality.  Supposedly, if the auditor can find a defect in the mortage, you may get out of the mortgage.  This sounds great, but in fact if there is a defect,  you don't automatically get out of the mortgage, or get the money.  You have just won the right to sue, which is expensive and lengthy.  And which will probably not net you any money.  A bank has the financial resources to outwait and outwrangle you, and probably will.

The Federal Trade Commision put it bluntly in a warning on mortgage audits:

...there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.
some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.
if you cancel your loan, you will have to return the borrowed money, which may result in you losing your home.

Or, according to the way the scam is reported to have run in a town in Wisconsin, you may be targeted for fraud even if you are not threatened with foreclosure.  People there got a financial audit notice, (which they could get for $99), and if they didn't find a defect, they could get their money back.  Since defects are often found, they weren't eligible for a refund, or course, but neither did they get rich off the defective loan.  Getting money from the mortgage holder over a defect would require the expensive and lengthy legal action discussed above.  So you are out $99. 

If you have reason to believe that something is seriously wrong with your mortgage, or you are in a foreclosure situation, run, don't walk, to a HUD-approved counseling agency in your area.  They have the savvy to help you out with legit help.


amicusman said...

Mortgage Fraud Examiners exposed this problem of bogus forensic loan audits over two years ago in a press release: "Beware of the Latest Foreclosure Rescue Scam—“Forensic Loan Audits."

Linda Koss said...

Thank you. Mortgage audits may be old hat elsewhere, but they are fairly new to NW Ohio.