State AG warns of forensic mortgage loan audits
by IBR Staff
Published: May 21,2010
Time posted: 3:30 pm
Tags: Idaho Attorney General
A new type of foreclosure “rescue” scam has infected Idaho. It uses half-truths and outright lies, so-called “forensic loan auditors” are exploiting financially strapped homeowners who are desperate to save their homes from foreclosure, according to the state Attorney General Lawrence Wasden.
These scam artists use many titles – forensic auditors, mortgage loan auditors, and foreclosure prevention auditors. They charge upfront fees ranging from $1,000 to $1,500 to review consumers’ mortgage documents, allegedly to determine whether lenders complied with mortgage lending laws. These “auditors” claim consumers can use their audit reports to avoid foreclosure, accelerate the loan modification process, reduce their loan principal, or even cancel their loans.
“Nothing could be further from the truth,” Wasden said. “There is no evidence that these audits result in anything other than more disappointment for the consumer.”
Forensic loan audits do not accelerate the loan modification process or provide any unique form of foreclosure relief. While some federal laws allow consumers to sue their lenders based on mistakes in loan documents, even if the consumer prevails, the lender is not required to make the loan affordable. If consumers “cancel” their loans, they will lose their homes and must repay any borrowed money to their lenders.
“Consumers who are delinquent in their mortgage payments or who are facing a foreclosure need to work with their lenders to formulate a solution,” Wasden said. “Sometimes that solution is a loan modification, a short sale, or even foreclosure. While consumers instinctively want to save their homes, sometimes it simply isn’t possible.”
Avoiding foreclosure rescue scams
v When looking for foreclosure prevention help, Wasden urged Idahoans to avoid any business that:
v Promises to stop the foreclosure process
v Tells you to cut off communication with your lender or servicer
v Charges an upfront fee before performing any services
v Asks you to quitclaim your home to the business
v Requires you to make your mortgage payments to anyone other than to your lender
v Pressures you to sign papers that you do not understand
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