Avoid Forensic Loan Audit Scams

There is never a shortage of people willing to exploit homeowners in foreclosure. According to the Federal Trade Commission, one such scam is the “forensic mortgage loan audit.” These forensic loan audits are also referred to as “mortgage securitization audits” or simply “forensic audits”.

The Forensic Loan Audit Scam

It works like this, the homeowner pays someone hundreds or even thousands of dollars in exchange for a forensic loan audit report from an “auditor” that supposedly determines whether or not your lender has complied with state and federal lending laws. The claimed purpose behind the audit is typically to defend against a foreclosure filed by the homeowner’s bank. The reports will typically have a disclaimer that they are not legal advice, but then go on to set out all sorts of alleged violations of the law. These “audits”, however, are completely useless in defending a foreclosure in Pennsylvania, and here’s why:

1) It is inadmissible in Court. Unless your bank’s attorney slept through evidence class in law school, this forensic loan audit report will not be admitted into evidence at trial. The written report itself is hearsay and, therefore, inadmissible. If your “auditor” was present at trial, he or she could certainly testify about the opinions stated in the report… that is IF the auditor is qualified as an expert by the Court.
2) Alleged Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) violations won’t typically save your home from foreclosure. As the FTC points out, you can sue your lender for violations of TILA and RESPA (assuming that they did, in fact, violate those laws). But, even if you win that doesn’t mean the foreclosure will stop or that your lender has to modify your loan. In fact, if you were successful in canceling your mortgage under TILA, you would have to give the bank its money back, which means you could lose your home even if you win! If you suspect that our lender violated TILA or RESPA, you would be better served consulting with an experience attorney than ordering an expensive “forensic audit”.
3) Securitizing a mortgage doesn’t make it invalid under Pennsylvania law. Most these audits are aimed at trying to convince the homeowner that their loan was “securitized” and that there was some sort of inherent flaw in the way that the loan was packaged and sold to investors. The bottom line is that many loans are, in fact, securitized, but Pennsylvania Courts have not recognized this as a defense to mortgage foreclosure.
4) The information in these audits can typically be found on the Internet for free. That’s right, most (if not all) of the information in these so-called “audits” are simply taken from public records available to anyone with a computer and Internet access. Which begs the question, why are the audits so expensive?

If you’re in foreclosure it can be difficult to tell scams from the real offers of help. There are a number of legitimate government programs that can help, free of charge. And, if you do need assistance or legal advice in defending your mortgage foreclosure in Court, you should seek out an experienced attorney admitted in your jurisdiction.