What is a Forensic Loan Audit?

A Forensic Audit is a very interesting term that has become very common these days.  It’s more of a power word used to scam customers in recent times, although that is not what it means, that is its real world implication in regards to the loan modification industry these days.  Historically this term regards to an in depth review something with the goal of finding any inconsistencies or incorrect items or occurrences.  Forensic audits have been part of the litigation field for years.  In regards to loan modifications, they have become very popular, but, consumers beware! 

In regards to loan modifications, the idea behind a forensic audit is to go through your loan documents to look for mistakes that the bank made.  Because every knows that there were a lot of corners cut during the mortgage boom, it is very easy for people to believe that there are fraudulent items in their loan docs, or that the loan itself was fraudulent.  The sales pitch is that with the information found in this audit, the company selling you will be able to approach your lender with a bunch of legal leverage, causing your lender to modify your loan or face possible conviction in court.  This all sounds great, but rarely, if ever happens.  Remember, these companies want upfront money for the forensic audit services.  The problem is, the vast majority of these companies charge in the thousands for these audits, and then spend an hour or less pouring over the loan docs and plug in a little bit of information to then formulate a report to give to you to show you how they earned their fee.  They then say that they really like your case and that you should pay more for them to go to the bank with this loaded gun.  In truth, the banks are tougher than these companies want you to believe.  Many times there are either no violations or the violation there are cannot be found by some 5 minute review of the docs.  Other times when there are violations, the statute of limitation has passed and thus the finding cannot be used for anything.  In 99% of these cases forensic audits turn out to be nothing other than a waste of money that is if the company selling it even performs an audit and doesn’t disappear with your money.
 If you come across a loan modification company using Forensic Audits in their sales pitch, look the other way.  They are a waste and they are useless in the loan modification process.

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