(CA AG Press Release) Los Angeles-Attorney General Edmund G. Brown Jr. today joined the California Department of Real Estate (DRE) and the State Bar of California in warning Californians to avoid forensic loan audits, the loan-modification industry’s latest “phony foreclosure-relief service,” in which homeowners pay up-front fees for a forensic review of their lender’s practices, but are provided no actual foreclosure relief.
“Forensic loan audits are yet another phony foreclosure-relief service hawked by loan-modification consultants trying to cash in on the desperation of homeowners facing foreclosure,” Brown said. “The foreclosure-relief industry continues to be long on promises, but short on results.”
Individuals and businesses who offer forensic loan audits use inflated and misleading claims to convince homeowners to pay up-front fees for services that produce no actual foreclosure relief. Homeowners are encouraged to pay for an audit of their mortgage loan file to determine their lender’s compliance with state and federal mortgage-lending laws. This audit is pitched to homeowners as a tool they can use to gain leverage and speed up the loan-modification process.
In truth, there is no evidence or statistical data to support claims that forensic loan audits-even if performed by a licensed, legitimate and trained auditor, mortgage professional or lawyer-will help homeowners obtain loan modifications or provide any other foreclosure relief.
“The State Bar is committed to dealing with all aspects of loan foreclosure fraud involving attorneys,” said State Bar President Howard Miller. “We will continue to work with all the other government agencies to prevent fraud and to move for disciplinary sanctions against attorneys who violate their obligations to their clients.”
By law, all individuals and businesses offering mortgage-foreclosure consulting, loan-modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan-modification consultants and businesses to charge up-front fees for their services.
Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan-modification consultants.
In 2009, the DRE investigated more than 2,000 complaints involving loan-modification scams. Nearly 350 individuals and companies received a Desist and Refrain Order to stop illegal activity.
“The DRE has aggressively pursued loan-modification scammers who prey on vulnerable and financially stressed homeowners, and those peddling false hope by promising mortgage relief with a forensic audit will be scrutinized,” stated Real Estate Commissioner Jeff Davi. “With consumer education efforts and warnings, we hope to keep consumers from falling victim in the first place.”
As part of today’s consumer alert, Brown offered the following tips to homeowners:
- Don’t pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
- Don’t ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
- Don’t transfer title or sell your house to a “foreclosure rescuer.” Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It could also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict you and take your home.
- Don’t pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
- Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off their delinquent mortgage. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.
Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.
If you are a homeowner who has been scammed, you can contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php. You can also learn more about avoiding scams and obtain a complaint form by visiting the DRE’s web site at: www.dre.ca.gov.
If you have a complaint against a lawyer, contact the State Bar Complaint Hotline at 1-800-843-9053. Complaint forms and an explanation of the attorney discipline system are available online at: www.calbar.ca.gov.
In 2009, California accounted for 22 percent of the nation’s foreclosure activity, with 632,573 homes in foreclosure statewide. This is an annual increase of more than 20 percent in foreclosure activity from 2008 and a 150 percent increase from 2007.
For more information on Brown’s action against loan-modification fraud visit: http://ag.ca.gov/loanmod.
Source: CA AG
As a Nationally know of and Expert Witness, who does Forensic Audits, I can tell Mr. J Brown and anyone, personally an Audit done by a real auditor, is worth every dollar it is paid to do them. Now, will some company which is running a few bits of Math from Loan Documents through a Compliance Software package like Compliance Ease or Interthinx or whatever do the consumer any good, Not that I have seen.
So, let’s seperate software Audits from a real live 40+ Year Auditor who use to be the only outside Auditor for the Santa Barbara District Attorney, the difference is Night and Day. Please, Moe, while an software package will not do much more than check the math from the original loan documents, the Federal, State, Local, Predatory and Mortgage Fraud is a live Auditor/Detective type of job. Sondra L. Homminga, spends six hours min, reviewing the documents and researching the County Publically recorded documents. If the CountryWide’s of the world of Mortgage created Fraud, conducted a Predatory Lending action or fail to Originate a Loan within RESPA guidelines, she will find it. Every loan audit so far has turned up something but how many actually gets a house for FREE, lets than 1%, how many gets a $100,000 Principal Reduction due to errors less than 10% and how many do get Principal Reduction of some kind less than 30% and how much can delay the Foreclosure process with something found in an audit, less than 50%. So, is the Forensic Audit worth doing, yes if you have a “Real Live Auditor” doing it.
We Audit and we hand the Audit over to a real live Attorney, to file in court in our State of Arizona. If the Audit comes up empty or without enough evidence for an Attorney to file in court, is it worth doing, Yes, because you know that the Loan was Originated within Guidelines and You owe the lender the amount owed.
Warning the Public that all Forensic Audits are useless is just as good to say that Loan Modifications are useless, both are not ends of the path, just a means to an end.
The only two solutions which make a difference in the current market is Purchasing of the Note at a Discounted Price then creating a New Note below CMV and Short Selling the home for less than what is owed, then walking away Free and Clear.
Everything else, is actually, just a waste of time and money.
We are Loan Detectives, we have gotten one home written off without an Attorney, many with $300,000 Principal Reduced and many more brought to court, so the violations are heard in front of Judge but to say, that Loan Audits are the cure all, not on you life, they find Fraud or Predatory Acts or Federal Originated Errors but that is it. Ultimately, the borrower used the money, the house has been lived in and in some cases the home’s equity created an HELOC, the use of the real estate to use money, was a willful act upon the Borrower, the Borrower owes some money to the Investor.
Any Questions, please write me,
Mark G. Cooper, Executive VP of Nationwide Fin & Doc Service
http://www.stayaftershortsale.com
A Forensic Loan Audit is a detailed review of original loan documents, from the closing of the real estate transaction to any refinances, secondary mortgages, and transfers of servicing obligations or ownership of the note between companies. The ultimate goal of a Forensic Loan Audit is to find enough mistakes or evidence to show a possible predatory lending argument against the mortgage provider.
Know with us more about forensic loan audit.