Phony Audits: A New Twist on Foreclosure Rescue Scams
The Federal Trade Commission reports on the latest flavor of the month…Forensic Loan Audits. Forensic Loan Audits are being sold as a way for consumers to “beat the bank.” The idea is for the auditor to comb through the mortgage documents of a seller in pre foreclosure in an attempt to provide discrepancies. Lore has it that some of these companies promise “forgiveness of all debt.”
Some excerpts from the report include:
In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure prevention auditors backed by forensic attorneys offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The “auditors” say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.
Nothing could be further from the truth. According to the FTC and its law enforcement partners:
- There is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.
- Some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.
- If you cancel your loan, you will lose your home and you will have to return the money you borrowed to your lender.
If you are in default on your mortgage or facing foreclosure, you may be targeted by a foreclosure rescue scam. The FTC wants you to know how to recognize the telltale signs and report them. If you are faced with foreclosure, the FTC says legitimate options are available to help you save your home.
Don’t get me wrong, there are legitimate companies that perform loan audits (typically involving attorneys) and their are legitimate reasons to have your loan docs audited. Beware of false promises. If the company wants to charge an up front fee, think twice.
If you want to read the bulletin, go to:
http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm
Phony Audits: A New Twist on Foreclosure Rescue Scams
by FTC
WASHINGTON, D.C. – May 10, 2010 – (RealEstateRama) — If you are facing default on your mortgage or foreclosure on your home, watch out for the latest scam: phony “forensic mortgage loan audits.” Con artists claim that for an upfront fee, their audits can help you hold onto your home. Don’t believe them.
In a new consumer alert, Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud, the Federal Trade Commission provides consumers with information and legitimate resources to help save their homes.
To read the alert and learn more about how to spot and avoid forensic mortgage loan audit scams, go to: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.