Improve Your Loan Modification Chances With a Forensic Audit
What is a forensic audit?
A forensic audit is an examination of an organization's or individual's economic affairs, resulting in a report designed especially for use in a court of law. A forensic audit is similar to the tax audits performed by the IRS; both strive to establish a comprehensive picture of an entity's finances (assets, liabilities, total income, cash flow). However, while a tax audit is intended to determine the true size of one's tax liability, a forensic audit can have several goals, including mapping cash flow/cash transactions, identifying accounting errors and enumerating total assets.
Why is a forensic audit important?
There are at least four reasons why law firms and loan modification companies perform forensic audits.
1. Professionalism: Performing a forensic audit demonstrates that you are diligently pursing all
available remedies and solutions. Would you rely on a doctor who performed a physical without lab work? Or a mechanic that serviced your engine
without looking under the hood? A forensic audit is part of understanding a borrower’s options and a lender’s motivations regarding a loan.
2. Competence: Forensic audits are an important element in establishing to regulatory authorities that you are providing expert and substantive value to troubled homeowners.
3. Effectiveness: Forensic audits are important in gaining the attention of the loss mitigation departments to the lender and servicers. It demonstrates to the lender and servicer that the borrower is being represented with
competence, that negotiations should proceed promptly and that it is in all parties’ interests to reach a win-win resolution.
4. Leverage: Forensic audits are a critical part of the actual loan modification process because it gives the borrower leverage when negotiating with the lender and servicer. Violations of federal and state consumer protection laws relating to mortgage lending may enable the borrower to rescind (effectively cancel) the loan, serve to block a
foreclosure, or may entitle the borrower to refunds or
monetary damages. Moreover, in cases where the borrower cannot show hardship,
show no equity in the home, or does not have sufficient income to support a modified loan, the forensic loan audit is the only means of blocking foreclosure proceedings or compelling the lender to agree to new loan terms.