Forensic loan audits on mortgages called potential scams

beware forensic loan reviewsInquiries and complaints about so-called forensic loan audits, aimed at getting mortgage modifications, are soaring -- leading consumer groups to warn that many of them are scams. Consumers need to know what they are getting before hiring a business that offers forensic mortgage loan audits because mistakes could literally cost the house.

During a forensic loan audit, an investigator examines all mortgage documents to see if the lender made mistakes or broke the law -- like inaccurately stating finance charges. Such mistakes could be used as leverage to change or reduce the home loan. The BBB has alerted consumers to the issue because it has gotten inquiries into the issue, said Jody Thomas, vice president of communications for the Better Business Bureau of Greater Maryland.

"This is pretty new on our radar screen," Thomas told Consumer Ally. "Because we have these businesses located in Maryland ... it's come to our attention."

Just last week the national BBB started to track forensic loan audit inquiries and complaints as a separate category, she said. Statistics weren't available for forensic loan audits alone, but businesses that offer debt solutions and foreclosure rescue services drew almost 21,000 inquiries and 160 complaints during the last 12 months at the Greater Maryland BBB.

The volume of inquiries shows that people are looking for any way to cut costs and that gives con artists opportunities. "People are pretty desperate and they are looking for lifelines out there," Thomas said. "It makes people easy marks."

The U.S. Federal Trade Commission called forensic mortgage audits a scam in an alert issued earlier this year and warned consumers not to fall prey to high-pressure sales tactics. The agency said there is no evidence that forensic audits help to get a loan modification or other foreclosure help.

The FTC added that even though consumers are allowed to sue their lenders based on loan errors, there is no requirement that the lenders have to modify loans. If a consumer cancels a loan, the borrowed money will have to be returned. The federal agency recently sued several mortgage relief companies for allegedly defrauding consumers.

Thomas said that while there are legitimate mortgages relief businesses out there, consumers should be careful in their research before enlisting a company's services and offered the following tips:
  • Find out how the company conducts the audits. If the company simply uses computer software, there could be mistakes. "People have to go through this, you just can't do a scan of a document," she said.
  • Ask the company what kind of awards consumers have gotten after using them.
  • Be wary of any company that tells consumers not to talk to the lenders or stop paying the lenders -- both could lead to serious consequences, including losing your home.
  • Beware of any upfront payments and avoid high-pressure sales tactics.
  • Talk with a real estate attorney if you think you were a victim of a substandard loan.
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