A fairly new scam targeting individuals facing foreclosure is on the rise. Desperate homeowners are paying upwards of $1,000 for third party companies claiming to be forensic loan auditors to review original loan documents line by line to uncover errors, violations of law, or predatory lending practices that can be used as leverage to negotiate with lenders. While forensic loan auditing is a legitimate tool to fight foreclosure that has saved several homeowners from losing their homes, the idea has been perverted by scam artists who take a homeowner’s money, claim to review documents that are never reviewed, and ultimately find “no errors or violations”.
The results of forensic loan audits can be used by attorneys representing homeowners tied up in mortgage litigation with lenders. Many attorneys can convince lenders to settle disputes out of court at the benefit to their client if a forensic loan audit uncovers evidence of errors or violations, especially if these errors or violations are directly responsible for a loan falling into default.
Homeowners in distress and facing foreclosure or mortgage litigation are advised to consult with a local real estate or mortgage attorney to determine if a forensic loan audit would be in order. In many cases, an experienced attorney can conduct the audit on their own, but sometimes, a referral to an independent third party may be needed. The difference between a forensic loan auditor whose services are secured by an individual homeowner and one whose services are secured by an attorney on behalf of their client is that those referred by attorneys will generally have a verifiable and proven track record. Attorneys don’t make a habit of referring clients to third party services unless they are confident in the abilities of the third party because the reputation of the attorney is put on the line.
When a homeowner is desperate, they will do almost anything to save their home, even walk right into a scam. The best protection against falling victim to a scam is to consult with a local attorney. Attorneys are held to higher standards that auditors, counselors, and other third party services are not. In most cases, the use of third party services will not even be required once the homeowner has secured the services and advice of an attorney. Attorneys are able to provide most, if not all, of the same services provided by non-attorney rescue companies, along with many services that third parties cannot. Attorneys can represent clients through mortgage litigation in court, but auditors and counselors can’t. By hiring an attorney, the homeowner is able to get multiple services from under one roof provided by the same staff. This can allow for lower costs and increased consistency in mortgage litigation defense for the homeowner.