Loan Audits | Forensic Loan Auditing | National Loan Auditors

Forensic Loan Audits & the Loan Modification Process, Part II

2009-07-06T14:21:00.000-07:00

Stephen Hoshida, Manager of National Loan Auditors' Online Legal Portal, continues his discussion of the loan modification process in Part II of this interview series:

What factors are taken into consideration by the mortgage lender when determining whether or not a borrower qualifies for a loan?

There are a number of factors that the lender takes into account when considering a loan modification. The primary concern for lenders may be the financial status of the homeowners. The lender needs to know what the financial situation of the homeowners is to know how they need to modify the loan. The lender will consider the violations that are found in the homeowner’s forensic loan audit. There are also external considerations on the lender such as federal programs, economic climate, and the will of the investors. All of these will be incorporated into the lenders decision on how to modify a loan.

What challenges can homeowners expect to face during the loan modification process?

The hardest part of a loan modification is the waiting period. The process may take some time and loan modification departments of the lenders are being over worked. If the homeowner is already experiencing financial hardship, the time it takes to negotiate a loan modification will compound the problem. Another challenge a homeowner may experience is in dealing with the lender. Lending companies have many different departments, each with a different agenda, and often time these departments are not informed as to what the other branches are doing. Also, with the unstable financial climate, banks are absorbing other banks and restructuring their own departments which results in a continual change in internal procedure.

How would a loan audit from National Loan Auditors benefit an attorney or other mortgage industry professional?

Forensic loan audits from NLA can specifically benefit attorneys and other mortgage professionals by giving them a quick legally sound distilment of a borrower’s case that they can use to plan their strategy on how to litigate the case or to approach a loan modification.

What sets National Loan Auditors apart from other forensic loan audit providers?

National Loan Auditors provides the best forensic loan audit on the market. NLA’s forensic loan audit contains over 125 checks to insure that the lender adhered to all the statutory regulations when issuing a loan. The Forensic Loan Audit Pro is the only “legal-centric” audit. This means that the audit not only outlines the lender violations that occurred in the loan, but also provides supporting statute an case law to explain why a violation occurred and how the violation can be used in a court of law.

How long does it take to complete a forensic loan audit?

A forensic loan audit only takes about 1 day to actually complete the audit. However with the demand for audits right now it takes about 5 days for a borrower to receive their audit.

With new legislation designed to support and protect homeowners, how will government efforts, like the Make Homes Affordable program, affect the loan modification process?

The MHA Program has been a huge step in the right direction to address the needs of the homeowners. MHA streamlines the process for homeowners to workout a loan modification. That being said they are still not a cure all. MHA only address a fraction of the problem loans out there because it only applies to Frannie and Freddie loan. There are still millions of homeowners out there who will not qualify through this plan. Lenders are doing what they can to come up with their own loan modification plans that address the remaining loan but they are swamped and understaffed so this process is slow.

Are National Loan Auditors’ forensic loan audits available only in California?

No, NLA provides forensic loan audits nationwide. We are even developing international audits for other countries.

What changes occur within the mortgage after a loan modification?

The changes to the mortgage are a modification of the terms of the agreement, hence the name loan modification. The original loan is still in effect and all the associated terms still stand, but the specific terms negotiated in the modification process are changed to reflect the new agreement. At it’s core a loan modification is a simple contract change.

Who should homeowners contact to receive help and more information?

National Loan Auditors
877-NLA-6676
1820 Bonanza St. Suite 201
Walnut Creek, CA 94596
www.NLAudit.com
--------------------
eModify Inc. a Legal Advocacy Group
877-4-EMODIFY
1820 Bonanza St. Suite 201
Walnut Creek, CA 94596
www.eModify.net

About National Loan Auditors:

National Loan Auditors is the Nation’s leading and most reputable provider of comprehensive forensic loan audit reports, offering superior services with unsurpassed results. Founded by August Blass, a financial services veteran with more than 20 years of executive experience in the field, the Walnut Creek, CA-based company provides quality control pre-close and post-close auditing, risk assessment consulting and fraud prevention services to the mortgage and banking industries.

Stephen Hoshida is a graduate of California State University Chico, with a Bachelor of Arts in Political Science and has completed his Jurist Doctorate at Golden Gate University of San Francisco. While attending law school, Stephen focused primarily on criminal law, working in the San Francisco County and Butte County District Attorney’s Offices.

Source: National Loan Auditors, Inc.
http://www.NLAudit.com

Forensic Loan Audits and the Loan Modification Process

2009-06-29T18:40:00.000-07:00

Learn about the loan modification process and discover how a forensic loan audit from National Loan Auditors may lead to a successful workout solution in this interview with NLA's Legal Portal Manager, Stephen Hoshida:

As the Nation’s housing crisis continues, thousands of homeowners struggling with unmanageable mortgage debt are desperate for a solution that will bring them financial relief. Predatory lending practices and subprime loans have forced an overwhelming number of loan borrowers into bankruptcy and foreclosure, and economists predict an even further decline in the real estate market as the country remains in recession. Despite the unpromising outlook foreseen by residential property analysts, there is still hope for America’s mortgage holders – relief is available and National Loan Auditors can help.

With recent legislation and lenders willing (or even required by law) to negotiate, the terms of a home loan can be modified in favor of the borrower to allow reduced monthly payments, an extension of the loan terms, or even the lowering of an entire balance due on the mortgage itself. A forensic loan audit, performed in the initial stages of the loan modification process, may uncover violations in the loan that would obligate the lender to modify mortgage terms and give borrowers legal recourse against the mortgagee should a lawsuit be filed. The forensic experts at National Loan Auditors thoroughly examine financial documents for validity and utilize state-of-the-art technology to ensure accurate and reliable results. Both a comprehensive forensic loan audit and a successful loan modification can alleviate budget strains and help families avoid bank foreclosure.

If a forensic loan audit can spot predatory lending practices and a loan modification can prevent a foreclosure sale, why don’t all homeowners modify their loans? The primary reason, unfortunately, may be that obtaining a loan modification can be a lengthy and difficult process to manage alone. Most debtors, a majority of whom do not have a legal background, have questions that require answers before taking any action, and rightfully so – failure to successfully bargain with a mortgage holder could mean foreclosure in the future.

Like any case involving legally binding contracts, the help of an experienced professional is often necessary. An attorney or loan modification company specializing in mortgage law can provide the assistance needed in order to reach an agreement with the lender. With a mutual goal of helping homeowners save their homes and avoid foreclosure, National Loan Auditors works with top attorney-based modification firms to deliver the only legally-reviewed forensic loan audit report available in the mortgage industry.

Stephen Hoshida, Manager of National Loan Auditors’ Legal Portal, understands the concerns of homeowners and recognizes the issues that attorneys and modification companies may face. In this two-part interview, Mr. Hoshida answers some important questions that explain the loan modification process and how a forensic loan audit from National Loan Auditors can lead to a successful loan workout solution.

What advice do you have for homeowners seeking a loan modification in order to avoid foreclosure?

My advice to homeowners contemplating loan modification would be to act sooner rather than later. If you are already late on your payments then the lender has already put into motion the inevitable foreclosure. Loan modifications take time so you do not want to wait until the last moment to seek help. Even if you are not late, but you foresee financial difficulties in the future, take proactive action to obtain a loan modification.

What steps should a homeowner take to prepare for the loan modification process?

Get organized. There are 3 areas of information that are crucial to obtaining a loan modification.

The first is the documents pertaining to the original mortgage transaction. Homeowners should get as much documentation from when their loan was originated and have it ready to be used as the basis of a forensic loan audit. This will include digging out the old shoe box of loan documents from when you originally obtained the loan. I would also suggest the homeowner requests a set of the lenders documents before you perform a forensic loan audit. This may not always be feasible since this takes 30-60 days, but if you can obtain the lenders package it will save time later on.

Secondly the homeowner needs to have all the information about what has happened to the loan since it was originated. Has the loan been sold? Was the homeowner ever charged late fees? Has the interest rate adjusted? All of this information is relevant and should be documented in some way. By getting these together before starting your loan modification you will expedite the process.

Third the homeowner needs to have a firm grasp on their financial situation and have supporting documentation to prove their income. This will take the form of pay stubs, tax returns, and bank statements.

How does an audit contribute to the loan modification process?

A forensic loan audit is an integral part of a loan modification. The forensic loan audit allows a homeowner to see what statutory regulations a lender violated when originating the mortgage. This allows the homeowner to work with the lender from a position of strength. The homeowner tells the lender, “There were serious violations made when my loan was originated, I could sue you and create a huge legal battle, or you could just give me a good loan modification.” Basically, the forensic loan audit gives the homeowner more leverage in working with the lender.

NEXT: Stephen Hoshida answers more questions about forensic loan auditing and the loan modification process in Part II of our interview series. Get free updates! Subscribe to this blog for the latest news and features from National Loan Auditors!

Source: National Loan Auditors, Inc.
http://www.NLAudit.com

Representing Yourself Pro Se in Foreclosure

2009-06-12T15:36:00.000-07:00

General Information About Representing Yourself

Foreclosure Defense | Forensic Loan Audits | Lender Negotiations

Is it ever sensible to appear in court without a lawyer?

In a regular, more formal courtroom, sometimes it's also a good idea to represent yourself. Hiring a lawyer is almost always unaffordable for disputes that involve less than $25,000 and often unaffordable for disputes in the $50,000-$100,000 range. In these cases, representing yourself may be your only reasonable option.

Can I learn everything I need to know to represent myself in court?

The basics of how to bring or defend a case aren't difficult, but trying to get on top of every nuance of procedure and strategy isn't easy. A two-pronged approach can work best: learn how to handle routine representation tasks yourself while hiring a lawyer as a self-help law coach to provide advice on strategy and tactics as needed. In many situations, hiring a lawyer to coach your self-help efforts will cost only about 10-20% of what it would cost to hire the lawyer to do the entire job. Ten years ago, trying to find a lawyer who would help you find your own way through the legal system was next to impossible. Today, given the surplus of lawyers and a gradual change in the profession's attitude towards self-helpers, it's much easier. Because law is an increasingly specialized field, however, you'll want to find someone who is knowledgeable about your type of problem -- not just any lawyer.

Is it difficult to prepare the paperwork to initiate a lawsuit?

Actually, it's often fairly easy. Initiating a lawsuit is especially straightforward in states such as California and Michigan, where court clerks provide preprinted fill-in-the-blanks forms for many types of lawsuits, but even in states where lawsuits are filed the old-fashioned way, using paragraphs of appropriate legal jargon on numbered legal paper, the actual wording is almost always available word for word from forms books or CD-ROMs. These information sources, which are routinely used by lawyers, are available at all public law libraries (usually located in the county courthouse) and are usually fairly easy for the non-lawyer to understand.

I've filed my lawsuit. What do I need to do next?

Before a case gets scheduled for trial, a number of things need to happen. Information about most of these, for example, whether and when a settlement conference must take place, when papers must be filed, and how to place a case on the court's trial calendar, are available from the court clerk. Unfortunately, how to accomplish other pre-trial tasks, which often come under the broad title "discovery", is left largely up to you and the other parties to the lawsuit. For example, one type of discovery consists of your taking the deposition (oral statement) of the other party or one or more witnesses to find out what he or she is likely to say at trial. Other types of discovery consist of interrogatories (written questions to the other party), a request to produce documents, or a request that the other party admit certain facts (stipulations).

Representing Yourself in Foreclosure Defense

Gather all your Documents

The first thing you need to do is gather all the pertinent information pertaining to your loan and your financials. The first place to start is to dig out your old loan documents that you were initially given in conjunction with your loan. Get every bit of paper that was given to you in regards to your loan. If you lost some or all of your documents then the best thing to do is to obtain copies from your lender or Title Company. This can take time so request these documents immediately.

At the same time you are gathering your documents regarding your loan, you should also be gathering your documents pertaining to your current financial situation. This includes bank statements, W-2, tax returns, pay stubs, an itemized list of income and expenses, mortgage statements, documentation of any rental properties or alternative sources of income.

Obtain a Forensic Loan Audit

Once you have all your documents together the next step is to obtain a forensic loan audit. A forensic loan audit will uncover any statutory violations committed at the time the loan was originated. This is important because it can be used as a defense to any foreclosure action that is brought against the borrower. If a borrower’s loan contains federal statutory violations they can use those violations to claim the loan itself or the method used to originate the loan was illegal, thus reducing the amount owed on the property or invalidating the foreclosure completely.

Verify the Violation

A forensic loan audit will highlight any violations made in the origination of the loan. The first thing that should be done is that the violations should be verified. The forensic loan audit relies on the documents given to the loan auditors. This means that the auditors only have the documentation that has been given to them by the client when performing their forensic audit. While we do our best to make sure all documents have been received from the clients, sometimes clients have lost documents. If a page was not given to them, then it will not be consider as part of the audit. This could cause the auditors to find a violation when really the page is just missing.

The borrower should verify what the lender has in their files to see if the lender’s files and the borrower’s file match. To do this the borrower should send a qualified written request to the lender notifying them of the violation and request any documentation they have relating to the loan. This will allow the borrower to verify that there was a violation. For example, if the audit finds a HOEPA violation because the loan was a high cost loan and no HOEPA disclosures were made, then the attorney should send the qualified written request to the lender to determine if the lender has any documentation that the HOEPA disclosures were in fact made.

Qualified Written Request

Assuming that you have sent a written request to see if the lender has the same documentation as the client, then you should have a qualified written request filed with the lender. If not, then a qualified written request should be filed at this point notifying the lender of the violation. Once a lender has received a qualified written request claiming violation of lending regulation they are considered to be on notice of the violation. The lender then has 20 days to respond to the qualified written request. The lender than has 60 days to address any claimed violations.

The borrower should lay out in the qualified written request what violations they believe occurred when their loan was originated, statutes citing the claimed violations, what relief they seek, and contact information for the legal counsel. The forensic loan audit should be used to determine what violations have been found and the corresponding statute references. This will legitimize your qualified written request and give it weight with the lender.

The statute is vague on what actually has to happen within 60 days of receiving a qualified written request. The lender probably doesn’t have to completely remedy the violation within the 60 days, nor can they just respond with a boiler plate language response dismissing the violation. The lender is required to come to the table with a working plan that can be agreed upon with some negotiation.

Determine What Outcome you Want

Now that you have gathered all your documents and performed an audit on your loan and have evaluated your financial situation you can now make an educated determination on how to defend against the foreclosure and what you ultimately want form the result to be. It is important that you determine ahead of time what you specifically want from the lender and how you plan on defending against the foreclosure. This way you will be able to form a cohesive strategy going forward and dealing with the lender.

There are a number of different outcomes that you might consider in defending a foreclosure action. Some options might include but are not limited to:

Working out a modification with the lender
Reducing the amount owed on the mortgage
Invalidating the foreclosure claim
Working out a short sale

It is important to be realistic about what your options are and what you can hope for in your case. The more objective you can be about your case, the better you ability will be to effectively represent yourself. Regardless of what option you seek it is important to flesh out an approach of how you will lay out your arguments to the court.

At this point you should begin to gather the necessary evidence to prove you case or to support your claims. This evidence can take many forms ranging from documents, to depositions, to witness testimony.

Negotiating with the Lender

It is important to keep in mind that the foreclosure process is a last resort for the lender. The lender would rather come up with some other way to be repaid on the loan. This means that coming up with some alternative to the foreclosure, in most cases, will always be on the table as an option. If you are representing yourself always be courteous when dealing with representatives of the lender, do not let your emotions get the better of you. Always be firm in what you are requesting but do not be rude. Be prepared to give and compromise in your negotiations with the lender.

Obama’s New Plans to Help Homeowners

2009-05-30T23:29:00.000-07:00

The Obama Administration announced last April 28, 2009 new details to being relief to homeowners under the Making Home Affordable program. Two new programs were unveiled. The first one is called the Second Lien Program which is designed to help homeowners achieve affordability. The Second program involves the integration of the FHA Hope for Homeowners plan into the Making Home Affordable Plan.

There are significant challenges to modifying loans for homeowners with first and second mortgages, especially in cases where the first and second mortgages involve different lenders. It is estimated by the U.S. Treasury that up to 50 percent of homeowners at-risk of being foreclosed involve homeowners with Second Mortgages on their homes. Hence, the Second Lien Program announced last week is estimated to help millions of homeowners.

The Second Lien Program is envisioned to work together with the loan modifications offered under the MHA program. When a Home Affordable Modification is initiated on a first mortgage, lenders participating in the Second Lien Program will automatically reduce payments on the Second mortgage according to some standards set by the U.S. Treasury. This program also makes it possible for homeowners to buy out the second mortgage with a lump sum payment under a formula also set by the U.S. Treasury. This gives homeowners the chance to extinguish second mortgages when appropriate.

The other announcement by the U.S. Treasury involves steps to incorporate the FHA’s Hope for Homeowners into the MHA program. Hope for Homeowners require the lender to accept a payoff below the current market value of the home, allowing the homeowner to refinance into a new FHA guaranteed loan. Refinancing into a new loan below the home’s market value gives the homeowner equity in the home thus resulting in a better financial position for borrowers who qualify.

Under the program changes announced last week, when lenders evaluate a homeowner for an affordable home modification, lenders will be required to determine the homeowner’s eligibility for a Hope for Homeowners refinancing. Where the homeowner qualifies, the lender must offer this option to the homeowner. To encourage lenders to join the program, they will be given incentives similar to the success payments in the MHA program.

To better illustrate the second lien program, the U.S. Treasury came up with two case examples.

The first example involved Family A, which took out a 30-year closed-end second mortgage with a balance of $45,000 and an interest rate of 8.6%. Today, the Family A has an unpaid balance of almost $44,000 on their second mortgage. Under the second lien program, the interest rate on Family A’s second mortgage will be reduced to 1% for the 5 years reducing their annual payments by over $2,300. After those 5 years, Family A’s mortgage payment will rise again but to a more moderate level.

The second example involves Family B, which took out an interest only second mortgage with a balance of $60,000 with an interest rate of 4.4% and a term of 15 years. Today, Family B has $60,000 remaining on their interest only second mortgage because none of the principal was paid down. Under the second lien program, the interest rate on Family B’s interest only second mortgage will be reduced to 2% for 5 years reducing their annual payments by $1,440. after those 5 years, Family B’s mortgage payment will adjust up and the mortgage will amortize again over a certain term.

Treasury Secretary Tim Geithner said that: “With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the administrations housing plan.” These programs are part of the ongoing effort of the Obama administration to solve the current economic crisis. Programs, guidelines and participants in these programs are likewise being constantly revised. Thus, homeowners also need to be vigilant and get up to date information on all their options as available programs are also constantly changing and updating.

National Loan Auditors’ Alliances with Rapid Reporting and PLATINUMdata Add Information Depth to US Court Audit™

2009-05-16T01:37:00.000-07:00

National Loan Auditors (NLA) has formed strategic alliances with two companies — Rapid Reporting and PLATINUMdata Solutions, Inc.– adding their cutting edge information technology solutions to US Court Audit™, the comprehensive, forensic analysis of mortgage loan files NLA has designed for participants in the bankruptcy process.

“Our alliances with these two innovative industry leaders add important and valuable dimensions to US Court Audit™,” August Blass, founder and CEO of NLA, said. Based on NLA’s nationally recognized Forensic Loan Audit Pro™, US Court Audit™ provides a detailed, independent analysis of loans and the underwriting process, identifying violations of state and federal laws and regulations by lenders, and uncovering evidence of fraud or other improprieties by home buyers, Blass explained. The audit includes a bottom-line recommendation for loan modification terms, providing a framework for negotiations between debtors’ and lenders’ counsel and a benchmark bankruptcy judges can use in evaluating modification requests.

“Verifications of the borrower’s information (provided by Rapid Reporting) and a current estimate of the property’s value (provided by PLATINUMdata Solutions, Inc.) are key components of both the loan analysis and the modification recommendations we make,” Blass noted.

PLATINUMdata’s collateral assessment tool, “Collateral Expert™” is a sophisticated automated collateral method that provides a real-time analysis of the subject and it’s comparables in the vicinity as well as market information, including declining value indicators. The analysis includes foreclosure activity and “Notice of Default” (NOD) data for the neighborhood, along with extensive comparable sales information — all updated weekly. Going well beyond any other standard collateral automation, Collateral Expert™ also spots crucial neighborhood details the original appraisal may have overlooked or excluded, verifies owner occupancy status, identifies relationships between buyers and sellers, and flags possible property flips and other illegal activities.

“With Collateral Expert™, we are able to give users of US Court Audit™ the most detailed and most accurate analysis of property values and market information available today,” Blass said.

“The idea behind US Court Audit™ is to provide a completely objective analysis and Collateral Expert™ fits perfectly with that goal,” Terry Cabaniss, assistant vice president for production at PLATINUMdata, said. “Like the loan audit itself, our property and market assessments are completely objective. The multiple data points on the Collateral Expert™ reports are provided from PLATINUMdata as a true third party conduit for collateral valuations” she added, “and the numbers and data don’t lie.”

Rapid Reporting focuses on the borrower side of the loan transaction. The company’s signature products — Direct Check and Income Check — “have made Rapid Reporting the acknowledged leader in mortgage fraud prevention efforts,” Blass said. “That’s why we are so excited about adding these premier identity, income and employment verification tools to the US Court Audit™ arsenal.”

Direct Check supplements Social Security number matches with information compiled from more than 150 proprietary databases encompassing 15 billion public and private records, making it the most comprehensive and definitive identity verification tool available. Income Check combines information from IRS taxpayer transcripts with merged reports from three major credit reporting agencies.

“We believe early authentication is the key to preventing mortgage fraud ” Jay Meadows, president and chief executive officer of Rapid Reporting, said. “We know that mortgage fraud contributed to the financial problems we’re seeing today,” he continued. “By adding our service to US Court Audit™, we can help ensure that these fraudulent activities won’t be repeated in the loan modification and bankruptcy process.”

The premier provider of forensic loan audits to financial institutions and attorneys nationwide, NLA created US Court Audit™ to address the anticipated surge in bankruptcy-related demands for court-ordered mortgage “cram downs” resulting from pending legislation that would allow bankruptcy judges to modify mortgage loans as part of the Chapter 13 bankruptcy restructuring process.

But regardless of whether this legislation is approved, Blass noted, pressure for loan modifications will increase, encouraged both by the Obama Administration’s home owner assistance initiatives and by the efforts of struggling consumers to save their homes. “Lenders, servicers and homeowners are going to be dueling over loan modifications for some time to come,” Blass said, “and the independent, comprehensive analysis provided by US Court Audit™ will be an essential negotiating tool, equally useful to both sides.”

The strategic alliances with Rapid Reporting and PlatinumData follow NLA’s recent announcement of an alliance with SigniaDocs, which provides electronic document preparation and quality control management solutions for the residential mortgage industry.

“NLA’s alliances with these three companies — all innovative leaders in their fields — provide the information and technology building blocks that will make US Court Audit™ a uniquely valuable tool, both within the bankruptcy process and outside of it,” Blass said. “We’re providing what amounts to a loan modification in a box,” he added. “The audit includes all the information attorneys representing lenders, servicers and borrowers need to negotiate a modification solution for their clients, and it provides the objective analysis bankruptcy judges need to quickly review or order loan modifications, so they can clear crowded court dockets and provide the expeditious, equitable relief all parties in a bankruptcy proceeding are seeking.”