Many people assume that if a lender starts foreclosure proceedings the defendant most likely owes the money and has no real defense in the case. However in the better part of the last decade questionable sub-prime mortgage contracts have been multiplying to record numbers. Many of these now high interest mortgages were created and approved by fudging income numbers and hiding abusive fees within the mortgage contract. Fortunately for many homeowners in a foreclosure crisis these direct violations to the law can come back to haunt the banks that created the mortgage contract. By having a loan/mortgage document audit performed on a mortgage contract homeowners can sift out any violations found in their mortgage contract, by an attorney, and use these as great leverage when both negotiating and defending a foreclosure. It’s important for any homeowner facing or in foreclosure to hire attorneys to defend their interests, the reason being is that a foreclosure is a lawsuit filed against consumers for non-payment of their mortgage. The lender hires attorneys to pursue their case against you, so hiring an attorney to represent you will significantly level the playing field and time is of the essence.
Any violation discovered during the audit process can significantly bolster your defense in the foreclosure proceedings. The banks will be much more willing to negotiate a deal in your favor after your attorney advises them of the violations to the law found within your mortgage contract. It is estimated that over 80% of sub-prime mortgages created after 2001 have violated the law. Your attorney will then use this information as leverage in defending your case and negotiating a proper settlement. In some cases the mortgage note violated so many laws to such an extent that the lender may actually owe the borrower money by the end of the negotiations. It is advised that anyone who suspects they may have been a victim of predatory lending or mortgage fraud to immediately commence a document audit on their mortgage contract. It can mean the difference between keeping your home or not. A document audit is the first step in foreclosure defense and its result determines what direction the firm needs to go next in the defense process.
The loan document audits offered by Bilu & Bilu attorneys are designed to identify potential cases of predatory lending law violations. Our team of mortgage professionals will thoroughly review the loan documents, and recalculate the substantive numbers to identify instances of failure to disclose accurate data to your client. Please note that our forensic audit only looks for federal law violations. Your state may have additional, and more restrictive, laws which you need to be considered for your client.
Keeping in mind that the goal of the forensic loan document audit is identifying violations of federal law, your goal is to use these violations to apply pressure to the lender so that your client will get a more beneficial result. When violations are found, your client may be eligible for damages through litigation, which in some cases may include rescission of the subject loan. Rescission means a principle reduction. Of course, if rescission is available, your client will need to produce the tender amount due. This is important to understand as many homeowners are in no position to tender as the value of the subject property has fallen drastically. Fortunately, many lenders offer what has been called “equitable rescission,” and if your jurisdiction allows this relief, you may be able to keep your client in his or her home.
The loan document audit includes the following:
CLIENT INTERVIEW – Our staff will conduct a telephonic or in-person interview with you to identify the parties involved in the underlying loan transaction.
DISCLOSURE ANALYSIS – Our staff will review the loan documents for missing dates and signatures, recalculate the Annual Percentage Rate and Closing Fees as well as other material values set forth in those documents. If the disclosures are materially deficient, our staff will identify those “failures to disclose” to you.
TILA, RESPA, HOEPA and SPECIFIC STATE ANALYSIS – Your client may have gotten a closed-ended loan which was disguised as an open-ended line of credit. If this is the situation, your client may have a solid case against the lender. Identifying some violations of federal laws requires not just recalculating numbers but looking at the underlying nature of the loan compared to the way the loan was presented to your client.
WRITTEN REPORT – You will receive a written report of the results of the forensic loan document audit.
Some of the issues that our forensic loan document audit might find are:
1. CONSTRUCTIVE FRAUD
Material facts include the terms of the loan, whether there is a prepayment penalty, or any other information that a reasonable borrower would want to know before accepting the loan. Did the broker, loan officer or anyone working for the broker or loan officer fail to disclose any material facts to the borrower? What about third parties?
2. FRAUD NOT SALESMANSHIP
Our audit reviews the representations, statements, and comments (electronic, written or oral) made by the loan officer, broker, notary and others for contradictions.
3. NEGLIGENT MISREPRESENTATION
Mortgage professionals make errors, but if those errors are below the standard of care for that professional, your client might have a valid case for negligent misrepresentation.
4. BREACH OF CONTRACT
The mortgage note and its attached documents constitute a contract. The lender is obligated to perform the duties set forth in that contract, including accurate calculations of the amounts involved in the mortgage.
As you can see a foreclosure defense is not so one-sided and straight forward as most people assume. Simply because the bank alleges you owe them a definitive amount of money definitely does not mean they are entitled to the entire amount or any of it in some cases. In the United States you have rights and if your rights were compromised during the creation of your mortgage contract you are entitled to seek damages whether it is: negotiation of reduced payments, principal reduction, forgiven debt, or many other solutions depending on your unique situation. Bilu & Bilu can help distressed homeowners preserve their rights and lead an aggressive foreclosure defense. Call us today at (954)596-0669 to speak with an attorney who can help diagnose your current situation and point you in the appropriate direction and that will work with you to seek a positive resolution in your unique case.