Loan Audit FAQ
Short Sale FAQ
Loan Modification FAQ
Bankruptcy FAQ

Loan Audit FAQ

What is a Loan Audit?
A Forensic Mortgage Loan Audit results in a comprehensive audit that reveals violations of Federal, State, County and Municipal Codes including RESPA, TILA, HOEPA, ECOA, and Tangible Net Benefit, detailing every violation, their severity, and the specific Code in violation. All of the forensic loan audit reports will reveal these guiding queries:

  1. Did the lender provide a good loan? Did the lender violate obvious "Good Faith" guidelines? For example, did they qualify the borrower for a loan that they could not afford?
  2. Did the lender violate TILA guidelines? Did they tell the borrower one thing, but delivered something different at the closing?
  3. Did they provide the correct documentation to the borrower at the proper times? Was it filled out correctly?
  4. Are the parameters of the loan in violation of the Real Estate Settlement Procedures Act (RESPA) or the Truth in Lending Act (TILA)?
  5. Did the loan deliver a Tangible Net Benefit to the Borrower?


Are there different types of Audits?
Yes there are a few different types of Audits and we will go over the 3 main types: · Basic Compliance Audit - 99% of all companies provide a Basic Compliance Audit whereby your documents are run through a software program and a 20 to 30 page report is generated. This is a very basic audit that generally will have mistakes and no real substance. · Investigative Audit - An investigative Audit includes the above but also a qualified investigator will thoroughly review the loan docs to check for violations, check licensing of those that issued the loan and for accuracy of data information. · Forensic Audit - Many people call audits Forensic Audits however it's important to note a TRUE Forensic Audit is no less than 120 pages, takes 4 full days to process and involves very in depth research. In Forensic Audits you must provide not only all of your closing documents but your original appraisal as well.

Why is a forensic loan audit important?
Would you rely on a doctor who performed a physical without lab work? Or a mechanic that serviced your engine without looking under the hood? A forensic audit is important to gaining the attention of the loss mitigation departments of the major lenders and servicers. It demonstrates to the lender and servicer that the borrower is being represented by a competent professional, those negotiations should proceed promptly and that it is in all parties’ interest to reach a win-win resolution. The forensic audit is also important to the loan modification process because it gives the borrower's representative leverage when negotiating with the lender and servicer. Violations of federal and state consumer protection laws relating to mortgage lending may enable the borrower to rescind (effectively cancel) the loan, serve to block a foreclosure, or may entitle the borrower to refunds or monetary damages. Moreover, in cases where the borrower cannot show hardship, has no equity in the home, or does not have sufficient income to support a modified loan, the forensic loan audit is the only means of blocking foreclosure proceedings or compelling the lender to agree to new loan terms.

What is the likelihood that a forensic audit will reveal a regulatory violation?
There is a very reasonable probability that a given mortgage transaction materially violates one or more consumer protection laws. The mortgage industry's struggle to comply with consumer protection laws is nothing short of staggering. A remarkable report published by the inspector general for the FDIC reveals that 83% of federally supervised banks that made loans at the peak of the mortgage boom were cited for patterns of "significant compliance violations." (You can download a copy of the FDIC report here). Importantly, the FDIC regulates banks that generally did not engage in subprime lending and that are required to have minimum regulatory controls in place. The percentage of lenders failing to comply with regulatory requirements is even higher for state-licensed, non-bank lenders—such as Ameriquest, New Century and Option One—who were responsible for originating 52% of subprime mortgages and are subject to a much broader patchwork of state regulation.

How can I be assured that my forensic audit is accurate?
By employing knowledgeable experts and utilizing the industry’s most comprehensive and precise regulatory auditing tool, Loan Mod Forensics makes certain that the complexities and nuances of mortgage consumer protection laws are fully considered. This approach reflects our commitment to being the leading provider of the most accurate residential mortgage forensic loan audits available.

How long does it take to perform a forensic audit?
The time it takes to complete a forensic loan audit varies depending on the complexity of the mortgage transaction and completeness of the loan file. However, audits are usually completed within two weeks. Expedited audits are generally available.


Short Sale FAQ

What is a Short Sale?
A short sale is the process by which a homeowner can sell a house for less money than he actually owes on the mortgage(s).

Who pays the fees in a Short Sale?
The lender will pay all the real estate commissions and the closing costs for the seller. The lender will also often pay back property taxes owed against the property.

How do I qualify for a Short Sale?
You have to be able to prove that you can no longer afford the home and have a valid hardship.

What is a valid Hardship?
The lender typically will be looking for some sort of financial hardship which typically comes from; Job Loss, Reduction of Income, Divorce, Illness, Mortgage Payment Increases, Debt Increases, etc… Every home owner’s situation is different so you are encouraged to call for a confidential consultation.

How long does a Short Sale take?
Unfortunately this is a difficult question to answer. We've had approvals in as little as 5 business days and some that take months. However we like to overestimate and give everyone the 3 to 4 month rule when it comes to approval time lines.

Why would a bank agree to a Short Sale?
Bottom line it can save money to the investor that holds your note. In order for the investor to foreclose they have to pay fees and some states offer very long time frames to homeowners before they can actually be foreclosed on. Therefore by performing a short sale not only does the investor have the opportunity to save on foreclosure Attorney fees but also holding costs associated to holding non-performing assets.

What are the benefits for me to do a Short Sale?
A Short Sale can be one of the best options for many homeowners facing foreclosure. A Short Sale allows the homeowner to sell the property and remove the secured debt associated with the home. The seller can walk away from the sale with significantly less damage than a foreclosure. A homeowner who decides to Short Sale their property typically experiences less impact to his/her credit. There are no upfront fees or costs associated with a Short Sale. Your lender pays for all fees including, closing costs, and Realtor commissions.

What type of paperwork is required when doing a short sale?
Your lender will require a specific set of supporting financial documents to consider a Short Sale. Each lender has different requirements. All lenders typically require a Short Sale package containing the following documents:

  • Recent Bank Statements
  • Recent Pay Stubs
  • Last 2 Years Tax Returns
  • Financial Statement
  • Hardship Letter
  • Purchase Agreement and supporting documentation


I'm current on my loan will my lender consider a short sale?
The answer is, maybe. There are lenders that will accept a Short Sale on loans that are not yet delinquent. Other lenders will not accept the file until the loan is in fact delinquent. We can put your Short Sale file together and submit it for approval.

Can you help me with multifamily and commercial properties for short sale?
Yes. We handle all residential properties in all price ranges, including residential commercial apartment buildings.

My property needs work can I still do a short sale?
Absolutely, In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn't. Lenders know the risk of loss increases when they foreclose on a property in need of substantial repairs.

I have multiple liens on my property can I still do a short sale?
Yes, however, it does get much more complicated and may take longer to complete a Short Sale. Each lien holder will have to be negotiated with individually.

What is HAFA?
The Home Affordable Foreclosure Alternatives (HAFA) Program is a government-sponsored initiative led by the US Treasury Department, administered by Fannie Mae with Freddie Mac as compliance agent, and executed by participating lenders to help homeowners avoiding foreclosure, specifically through short sales or deeds-in-lieu.

How does the HAFA Short Sale work?
In a Short Sale, the homeowner sells the property for less than the full amount due on the mortgage. When a homeowner qualifies for the HAFA Short Sale, the servicer approves the Short Sale terms prior to listing the home and then accepts the payoff in full satisfaction of the mortgage.

How can I be considered for HAFA?
Homeowners must be evaluated for HAFA within 30 calendar days of the following:

  • The borrower does not qualify for HAMP.
  • The borrower does not successfully complete a HAMP Trial Period.
  • The borrower is delinquent on a HAMP modification.
  • The borrower requests a short sale or Deed-in-Lieu of Foreclosure.

However, before evaluating a homeowner for HAFA, a participating servicer must first consider that homeowner for other loan modification or retention programs that they offer. In addition, pursuant to the servicer's policies, every eligible homeowner must be considered for HAFA by a participating servicer before the homeowner’s loan is referred to foreclosure and before the servicer may allow a pending foreclosure sale to continue.


Loan Modification FAQ

What is a Loan Modification?

A loan modification is a change in one or more terms of a borrower's original loan term agreement.

How do I know if I qualify for a Loan Modification?
By law anyone is eligible to request modification. This unfortunately leads to mass confusion since the lenders have a habit of telling people they qualify for modification without even reviewing their documentation. Typically this is because everyone qualifies to apply for modification however that does not mean that ultimately they will be approved.

What are the requirements for the Federal Assistance Program Announced by the Federal Government?
Making Home Affordable Modification Program The program provides small incentives to lenders to modify loans and also provides incentives to homeowners to stay in their homes, including a reduction of the balance of their mortgage by up to $5,000. (YOU CANNOT OWE MORE than 105% of the value of the home) The basic idea is to reduce monthly mortgage payments (including tax payment impounds) to 31% or less of the homeowner’s monthly income. It's important to note that if your loan balance cannot be sustained by 31% of your income it's extremely unlikely you will qualify for the modification program. Here are some of the details of the program, from a government publication about the program:

  • The mortgage to be modified must have been originated on or before Jan. 1, 2009.
  • New borrowers will be accepted until Dec. 31, 2012. Program payments will be made for up to five years after the date of entry into the modification program. Monitoring will continue through the life of the program.
  • The home must be an owner-occupied, single-family one- to four-unit property (including condominiums, cooperatives, and manufactured homes affixed to a foundation and treated as real property under state law).
  • The home must be a primary residence.
  • The home may not be investor-owned.
  • The home may not be vacant or condemned.
  • Borrowers in bankruptcy are not automatically eliminated from consideration.
  • Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights. Under the program, lenders would reduce the mortgage interest rate to no less than 2% and/or extend the payment terms to no more than 40 years to bring the monthly payment to no more than 31% of the homeowner’s monthly income. The interest rate would stay at that level for five years, and then increase each year by no more than 1% until it reaches a certain defined cap. Again in order to qualify you CANNOT owe more than 105% of the loan which unfortunately knocks out most of the high foreclosure states. Additionally the program is not available for jumbo loans.


How can I Stop Foreclosure?
There is a lot of mis-information about being able to STOP foreclosure. In actuality most things will PAUSE the foreclosure process however short of having a signed Loan Modification Agreement, Sitting in an Escrow office and selling your property or Reinstating your loan with the full delinquent amount, nothing can stop a foreclosure. In fact a lot of people think Bankruptcy can stop foreclosure however that's not necessarily true. In fact Bankruptcy laws have changed and in a lot of cases homeowners are shocked 30 to 60 days after they file Bankruptcy to find the lender was able to remove the home from Bankruptcy.

Does Bankruptcy Stop Foreclosure?
The question will depend on your specific situation. Generally however the answer is NO Bankruptcy will not stop foreclosure it will only PAUSE foreclosure. The length of that pause will depend on too many factors to get into here however it can be as little as 15 days. If you're considering Bankruptcy contact our office immediately to see what our Bankruptcy Attorneys will have to say about your situation.

How much time do I have to do something?
Unfortunately if you are delinquent or know you're going to be delinquent that waiting is NOT the answer. It's estimated that over 1,000,000 homes will go to auction this year. That's a significant increase from last year even with all of your grandkid's tax money thrown into the abyss to try and stop it. Bottom line it's always best to be proactive about your situation and get it out of the way immediately. If you are delinquent the time you have before your home goes to auction will depend on your state. For example in California the break down is below:

  • From the date you are 1st delinquent you will have 90 days before a Notice of Default if filed.
  • Once you receive the Notice of Default you will have 90 days before a Notice of Trustee Sale is filed.
  • Once you receive the Notice of Trustee Sale you have 21 days before your home will go to auction.

Though this may seem like a long time... it's really not considering it takes about 90 to 120 days just to process a modification. While the sale can be stopped during the modification process with some lenders it's automatically reset for 30 days. Don't be one of the many people that contact us when it's too late. Never hesitate when it's something as important as your home.

My bank says they will modify my home at no charge. Why should I pay someone?
First keep in mind that we do not allow any of our members to charge people an upfront fee for a modification.  Monies are only paid once work has been completed on the modification request.  Additionally we always recommend you try working a modification directly with your lender.  That being said some people prefer to have a 3rd party work their modifcation for multiple reasons.  Take for example owing money to the IRS. The IRS will take your money if your delinquent in taxes so why are there so many Tax Attorneys that specialize in negotiating back taxes? Because the the lender like the IRS is a debt collector in fact they are required by law to advise you of such everytime you call them. Some people dont' feel comfortable working with debt collectors, some people don't have the time and then there are some people that don't like the results they get after their first attempt.  If any of these are you feel free to contact us.

Is it ok if I try and modify my loan with my lender directly and then if I don't like the plan pay someone to help?
It is highly encouraged that you always attempt to work with your lender first.  Some people cannot commit the time involved and then some people don't like what happens when they start to work with them.  If for some reason you are unahppy with the results or cannot commit the time it might then be beneficial to seek outside assistance.

Several companies of contacted me recently offering to help. What's different about you?
The biggest difference is experience. There are a very small amount of people now still in operation that will outright just take your money and do nothing but those are disappearing quickly. The problem is even the companies that really want to help you just don't know what they're doing. In fact a recent poll showed of the people that advertise the most on radio, TV, direction mail a whopping 80% of those companies had been in business less than 90 days. Which means you are risking your biggest asset to people that is on the job training. When you work with our member Attorneys and industry experts you will have the confidence of knowing our membership requires people have a min of 7 years experience in their field prior to joining our network. 

How long does the process typically take?
That will depend on your lender and that can vary widely 2 to 6 months.

Do I have enough time to stop my foreclosure?
Technically we can stop a foreclosure auction all the way until the day prior. However it is company policy that we do not take files within 3 days of foreclosure auction it's really a lot of work to stop the sale.

I'm currently in bankruptcy. Can you still help?
We take these files on a case by case basis. You will have to contact us for you free consultation as this issue can be a complicated one.

My lender is contacting me why shouldn't I just work with them?
We highly encourage your to always attempt your first modification request with your lender.  If for some reason you cannot commit the time or are not happy with the results you may want to seek assistance.  Please note with the new Nationwide Mortgage Settlement and CA Home Owners Bill of Rights you are now generally limited to 3 modification attempts.

Should I file for bankruptcy to save my house?
Here is what's important for you to know The American Bar Association has reported that 96% of homeowners who declare bankruptcy end up losing their home to foreclosure anyway. Bankruptcy is very unlikely to help you save your home. If you declare bankruptcy you will likely end up with BOTH a bankruptcy and a foreclosure on your credit report. That being said, there certainly are times when bankruptcy is appropriate and we recommend you consult with our Bankruptcy attorneys should you think you need it.

Do I need to have a special type of mortgage loan for you to help me?
No. We specialize in all types of loan resolutions of government and non-government mortgage delinquencies or home foreclosure claims for homeowners. These can be FHA, Rural Administration, VA, Freddie Mac, Fannie Mae, or conventional loans which have become delinquent.

What if I can no longer afford my home? Can you still help me?
Yes. If you are certain that you cannot afford your home any longer and wish to sell, we can help you to secure a short sale payoff or a deed-in lieu of foreclosure agreement with your lender. Often times these agreements can be arranged at low or no cost to you.

What does "Acceleration Clause." Mean?
It means that once a borrower is in default, the lender can choose to demand payment of the entire balance of the mortgage in one lump sum.

What happens to the property if the lender goes through the entire foreclosure process and no one bids on the property?
If you live in a redemption period state it MAY be possible to try and negotiate terms with your lender to stay in your home. Otherwise they ask the people to leave typically within 30 days.

What does a notice of default mean?
A Notice of Default (N.O.D.) means that the bank has contacted an attorney and the foreclosure process has begun. They have set a date at which your home will be auctioned off at a public auction to the highest bidder.

What does Notice of Trustee Sale Mean?
Once the borrower receives a Notice of Trustee sale they will have 21 days prior to the property will go to foreclosure auction.

What does "Lis Pendens" mean?
It is a Notice of a Pending Lawsuit and one of the initial a step the lender takes on the path to foreclosure.

Do I have to be delinquent to get a loan modification?
Though most lender say you do not have to be delinquent to be considered for modification.... the reality is if you're servicing the debt it's a hard case to make that you can't afford the mortgage. The exception to that would be of course if you have something coming such as a lay off which you know will knowingly cause you to be delinquent within a 60 day time frame.

What is an acceptable Hardship situation?
Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co borrower or family member, illness, job relocation, military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application.

Can my missed payments be added back into my new loan modification?
Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current.


Bankruptcy FAQ

What's bankruptcy?
Bankruptcy is defined as the legal declaration of a debtor to be unable or to have impaired ability to pay its creditors.

What's the difference between secured and unsecured debt?
Secured debt is debt that is tied to property such as a mortgage loan or car loan. Unsecured debt is debt that is not attached to property such as a signature loan from a bank.

Which kind of bankruptcy should I file?
Unfortunately this is not question that can be answered on an FAQ. There are too many variables and you must qualify for different types of bankruptcy such as Chapter 13, 7 or 11. In order to find which option is for your please contact us for your free consultation.

Can I change from one chapter of bankruptcy to another?
As a general rule you can however it's important to make sure you're working with an Attorney before you switch from one type of bankruptcy to another.

Who can file bankruptcy?
Generally speaking any person or business entity can file for bankruptcy protection.

How often can you file for bankruptcy?
Filing bankruptcy in itself is to be used only as a last resort. The time stipulations involved with repeatedly filing bankruptcy depend on the type of filing. For example Chapter 7 can only be filed every 8 years from a previous Chapter 7.

What do I need to begin the bankruptcy process?
Please visit our Bankruptcy services tab to begin the process.

Do you have to have a certain amount of debt to file?

What's a joint petition?
A joint petition is when an individual and a spouse file a single petition. Unmarried partners must each file a separate case.

What happens if one spouse files for bankruptcy and not the other?
If one spouse files and the other doesn't, the one who doesn't file could be responsible for the debts. Review this carefully before filing.

Does my divorce decree protect me from creditors if my ex files for bankruptcy?

Can a co-signor of a loan be responsible for a debt if the other person has declared bankruptcy? Yes.

Can all types of debt be discharged?
No. Please see list below for non-dischargeable debts.

  • Debts for taxes owed to local, state or federal agencies
  • Debts for money, property, services, or an extension, renewal, or refinancing of credit, which was obtained fraudulently
  • Debts that weren't in the initial list of debts or that the debtor waived being cancelled
  • Debts owed to a spouse, former spouse, or child, for alimony, maintenance, or support of a spouse or child, with a separation agreement, divorce decree or other order of a court of record
  • Debts owed for injury to another person or property owned by another (as in a court judgment)
  • Debts for government-sponsored educational loans, unless it can be shown that repayment will cause an undue hardship
  • Debts for death or personal injury caused by the debtor's drunk driving or from driving while under the influence of drugs or other substances (as in a court judgment)
  • Debts incurred after a bankruptcy was filed
  • Any type of legal judgment


What can I keep, if anything, if I file bankruptcy?
Exemptions allow an individual to "exempt", or keep, certain kinds of property. State law defines what assets are considered “exempt,” but typically includes:

  • Jewelry
  • Vehicles up to a certain amount
  • Equity in a home up to a certain amount
  • "Tools of the trade" or tools and equipment necessary to allow the individual to continue working


Do I have to file bankruptcy on all the accounts I owe, or can I keep some?
You must list all the debt however you may "reaffirm" the debts you would like to continue to pay on.

Will I lose my retirement accounts or payments from social security?
Generally, no. Retirement accounts that are ERISA-qualified aren't considered property of an estate and aren't taken into consideration as assets. Social Security benefits are protected from assignment, or garnishment for debts in bankruptcy. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For example, money in a bank account where the "only" deposits into the account are direct deposits of Social Security benefits is identifiable and generally protected.

Will I lose my home if I file for bankruptcy?
Possibly. The factors that impact your ability to keep your home are:

  • The state you're in and the exemptions allowed
  • The status of your loan (current or in foreclosure)
  • The type of bankruptcy you're filing (Chapter 13 provides more protection than Chapter 7 as long as payments are current)


How long does a bankruptcy stay on my record?
7 to 10 years.

Can I do anything to remove a bankruptcy from my credit report?

When can I apply for credit again?
There is neither law requiring creditors to extend credit to applicants nor any law barring people for applying for credit. The extending of credit will ultimately be up to creditors.

Can a creditor continue to contact me after I've filed for bankruptcy?
No. As long as there is a stay on all creditors they may not contact you during bankruptcy proceedings.

Who lets my creditors know I've filed for bankruptcy?
The bankruptcy court notifies, by mail, all creditors advising them of:

  • The filing of the bankruptcy
  • The case number
  • The automatic stay
  • The name of the trustee assigned to the case (if filed under chapters 7 or 13)
  • The date set for the meeting of creditors
  • The deadline, if any, set for filing objections to the dismissal of debts
  • Whether and where to file claims

The exact information in the notice may be slightly different depending on the chapter under which the case is filed.

What does a trustee do?
The trustee's job is to:

  • Administer the bankruptcy
  • Make sure creditors get as much money as possible
  • Run the first meeting of creditors (also called the "section 341 meeting").
  • Collect and sell non-exempt property (in a chapter 7 case) or collect and pay out money on a repayment plan (in a chapter 13 case)
  • Obtain information from you and documents related to your bankruptcy


Can creditors object to a bankruptcy filing or plan?
Yes. Bankruptcy filings allow creditors to object to specific debts in the plan or the repayment or cancellation in its entirety. Chapter 7: Creditors generally have 60 days after the first creditors meeting to object to the discharge of a specific debt. If no objections are filed, the court issues the discharge order and the trustee collects and sells the assets then distribute the proceeds to the creditors under a predetermined schedule. If there are objections, the bankruptcy proceedings, less the objected debt(s), continues. A trial may be necessary to resolve the objectionable issues. Chapter 13: Creditors can object to the plan for repayment and the court may take this into consideration. If no objections are filed by creditors or the trustee, the plan may be confirmed as filed.

What happens at a creditors meeting?
The debtor must attend the creditors' meeting conducted by the trustee appointed to their case. The debtor must answer questions concerning:

  • How the situation evolved
  • Any actions taken with the property
  • Debts listed in the petition or any other financial information requested by the trustee

Failure respond untruthfully can result in the petition being dismissed or, in extreme cases, a charge of perjury. Creditors may attend and question the debtor about the assets or any other matter relevant to the bankruptcy. A creditor doesn't waive any rights by not attending the creditors meeting.

What if I've forgotten to include a debt on my schedule? Can I add it later?
After filing the petition, if you discover that an entry is inaccurate or missing, you may typically file an amendment to correct it. Remember, you're submitting the petition under the penalty of perjury, so take care with the initial filing. Also, any debt that isn't on the list can't be discharged and you'll be responsible for it.

When do I have to stop using my credit cards if I'm planning on filing for bankruptcy?
As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If purchases are made 40 days prior to filing or cash advances taken within 20 days of filing, the debt may possibly be excluded from the bankruptcy and it can be dismissed.

What's a reaffirmation agreement?
When you "reaffirm" to pay off a debt, you're legally obligated to pay all or a portion of an otherwise cancellable debt. This is voluntary and not required by bankruptcy codes. You may voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be valid legal reasons for wanting to reaffirm a specific debt, such as a vehicle loan or student loan.

Can a bankruptcy be reopened?
Yes. Typically, a bankruptcy case is reopened by the trustee when questions arise concerning what was included or possibly omitted, or any other irregularities that surface.