Forensic Loan Audits Called Latest Scam

February 22, 2010 No Comments »


Los Angeles Attorney General Edmund G. Brown Jr. warned Californians today to avoid “forensic loan audits,” referring to them as the latest “phony foreclosure-relief service.”

He said homeowners pay up-front fees for a review of their mortgage lender‘s practices, only to be provided nothing in the way of foreclosure prevention.

The service essentially audits a borrower’s loan file to determine if the original lender complied with state and federal mortgage lending laws.

If flaws are found, homeowners are told they can use them against the bank to speed up a loan modification or gain leverage to set up some kind of deal.

Ironically enough, some of these loan auditors may have been the same loan originators that broke the rules in the first place.

“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 in a release.

“The foreclosure-relief industry continues to be long on promises, but short on results.”

Brown has sought court orders to shut down more than 30 fraudulent foreclosure relief companies, resulting in criminal charges and prison sentences for dozens of consultants.

Last year, the California Department of Real Estate (DRE) investigated more than 2,000 complaints involving loan-modification scams, with nearly 350 individuals and companies receiving a Desist and Refrain Order to stop illegal activity.

Upfront fees on loan modifications, which are already illegal in California, are set to be banned nationwide, according to a proposed rule by the FTC.

Related: Worst loan modification companies.

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