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# HowTo Package Your Loan Mod Application Kit
# HowTo Phone Negotiation Tips
# HowTo Complain & Motivate To Get Action
# HowTo Follow Up by Phone, Fax, Mail
# HowTo Use a Qualified Written Request
# HowTo Use a Mortgage Audit
# HowTo Fight Rejection Tactics
# HowTo Stop a Foreclosure Sale In 1-Day
# HowTo Remove Bad Credit & Raise Your FICO Score
# HowTo Eliminate All Your Debt

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Q: Should I negotiate a loan modification using a mortgage audit?

Answer: Negotiating a loan modification using a mortgage audit, aka, forensic audit, has it’s challenges.

However, there may be a better way triggered by the robo-signing scandal.

When I first wrote this post, some experts took the position that mortgage audits were not as successful as some advocates may have you think.

First of all, mortgage audits, supporters contend, can help by uncovering mistakes or legal violations in loan documents, giving homeowners a bargaining chip in negotiations with lenders.

Yet many others with experience in the field say that in most cases, a mortgage audit is no bargain at all.

“We find violations in 98-percent of the audits we perform,” says Sylvia Alayon, vice president of operations at the Consumer Mortgage Audit Center, a due diligence and consulting company based in Fort Lauderdale, Fla.

“The mere fact that we’re finding so many tells us that there were not a lot of standards in loan qualifications. People were put into loan programs they simply could not afford beyond the initial payments. If you could fog a mirror, you could get a loan.” // Article continued after video //

URGENT UPDATE Oct 2010: “Robo-signing” news headlines may now be trigger to force banks to negotiate favorable loan modifications

Watch this video for more details and read my post on how to use this screw up to your advantage

// Article continued //
Homeowners can then take their audits to an attorney or a consumer advocacy group, Alayon says, and “depending on the type of violation, there are remedies available to them. The audit serves as the negotiating tool in getting their loan modified.”

Foreclosure, she points out, involves a lawsuit, “and that means going to court, which can become very expensive.”

Few audits succeed

But consumer advocates say that people who pay for a mortgage audit will have to pursue any errors in court anyway — and few cases to date have been successful.

First of all…

“In my opinion, they’re a waste of money,” says Margot Saunders, an attorney with National Consumer Law Center. “The ones I’ve seen are often wrong.

How you can force your loan servicer to get off the dime and approve your loan modification - especially if they have been jerking you around

  • In your loan modification application, include a Qualified Written Request that requests a copy of the note. This is the note that is referred to in the video segment. If they cannot produce it, which is highly likely, you've got leverage against them to negotiate aggressively, ie, get a principal reduction along with better interest rate terms. This will likely an in-house modification deal, not a HAMP deal.
  • Watch the Q&A Coaching Videos for more help:
# HowTo Package Your Loan Mod Application Kit
# HowTo Phone Negotiation Tips
# HowTo Complain & Motivate When Getting the Run Around
# HowTo Follow Up by Phone, Fax, Mail
# HowTo Use a Qualified Written Request
# HowTo Fight Rejection Tactics
# HowTo Stop a Foreclosure Sale In 1-Day


“Second, even if they are correct, you need to hire an attorney who knows how to use them. Third, even if you’ve got a good claim, that doesn’t necessarily mean you’ll have a case. An audit of the numbers in a file omits the much more important story of what went on and why the consumer was wronged, if they were. They don’t tell the whole story, so they’re often unsuccessful.”

In some instances, judges might deny foreclosure actions because the lenders are unable to produce the notes that prove legal ownership, says Barry Zigas, director of housing and credit policy at the Consumer Federation of America.

A large portion of the loans now in trouble were securitized, he says, and shipped to a trustee to hold — “so when the judge asks the lender to produce the note, they don’t have it.”

Another loophole might open up, according to Zigas, “if there was a deliberate attempt to qualify for more than the borrower could afford, and there’s no evidence that the borrower colluded.” But that would be extremely difficult to prove, and, he admits, “how often any of this is happening, I don’t know.”

Almost never, says Sara J. Mobley, managing member of S.J. Mobley & Associates in Greenwood Village, Colo.

“We used to do mortgage audits in-house,” she says. “It’s true that the majority of loans have Real Estate Settlement Procedures Act (RESPA) or Truth in Lending Act (TILA) violations, but if you take it to litigation, you’ll have to submit it to the lender, and loan servicers and investors are taking a punitive attitude.

It’s the little guy against the big guy

“It’s the little guy against the big guy. Banks can draw litigation out as long as they want. Plus they will have to expend money on legal help, pull the documents for the RESPA, and recalculate the TILA. It’s a lot of work, and as a result they are not going to be as amenable to giving you a loan modification.”

Rashmi Airan-Pace, a partner in the real-estate law firm Airan2, Airan-Pace & Crosa in Coral Gables, Fla., reports much the same experience.

“I used to try to sell every client on the idea of a forensic audit,” she says, “and send a very aggressive letter to the bank for violations of TILA or RESPA. What we found is that generally we were not getting the results we expected. Banks are not responding, and my experience is that they’re not helping people get reductions. I almost felt like we were being blacklisted.”

Litigation costs

Some people want a mortgage audit to find out what’s wrong with their loan, Mobley says. Others want to be able to call upon a mortgage auditor as an expert witness — though very few are qualified as such.

“Many clients are determined to sue, but find they can’t afford litigation,” she says. “In cases where the homeowner insists on it, we’ll do it, but in my opinion they only create unrealistic expectations.”

“We will do audits if a client is denied a modification and wants to file a lawsuit against the bank,” says Airan-Pace, “but only if it makes sense, and they are pursuing an aggressive strategy. Litigation is costly and not fun.”

Any consumer opting for an audit, Airan-Pace says, “needs to do their research and make sure that whoever they hire has real experience. There are many people, both lawyers and nonlawyers, going to weekend seminars and claiming to be foreclosure experts. And, of course, people should be wary of anyone who makes lofty promises or guarantees.

“Unfortunately, there is no quick fix.”

Loan Modification Help To Get Approved Faster: Learn how to package your loan modification application, get effective coaching to get to the front of the line and combat the stall tactics servicers are using
Click here to get proven help with your home loan modification

Homeowners – Need Some Sound Advice?

Get Out of Debt Workbook
Seasoned debt expert shares several little known but highly effective techniques guaranteed to get you out of debt fast – no matter how much you currently owe.
Stop Foreclosure
Get more help on fighting to stop a foreclosure. A little-known government program will stop a foreclosure in less than a day without an expensive attorney. Ideal for you if you have been rejected for a loan mod, in a trial loan modification or unemployed to buy valuable time.

Legally Restore Your Credit
If you are visiting this blog, you likely have mortgage lates, which are a big blemish on your credit report. Once you resolve your mortgage situation, you can legally remove those mortgage lates and all derogatory credit from your report without having to hire an expensive attorney or credit repair service.

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Tags: Consumer Federation of America, forensic audit, , , mortgage audit, , National Consumer Law Center

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