Scams in Forensic Audits Cost Borrowers Millions

[Corey Dutton]

Foreclosure rescue scams, also known as forensic loan audits, are still alive and well. In a loan modification scam, a forensic attorney or CPA, agrees to review mortgage loan documents in exchange for a fee. These so-called forensic auditors are looking for violations that could help homeowners avoid foreclosure or receive reductions in loan principal balances.

These scams were run on every street corner from 2008 to 2010. Although many of them have run aground or have been taken down by State and Federal regulators since then, there are many of them still operating and are taking millions from borrowers in upfront fees per year. The problem is there is no guarantee after paying an upfront fee to one of these outfits that you’ll get anything out of it. Even if you do win a lawsuit against your bank, in many cases you have to pay the reduced loan back. And how will you do that if you consider that there’s no other bank that will refinance a bad loan, even if the principal has been substantially reduced?

According to the FTC here are a few warning signs to look out for if you are considering using a forensic auditor to audit your mortgage loan documents:

Guarantees to stop the foreclosure process – no matter what your circumstances are

Instructs you not to contact your lender, lawyer or credit or housing counselor

Collects a fee and accepts payment only by cashier’s check or wire transfer

Recommends that you make your mortgage payments directly to it, rather than your lender

Are you aware of any scams such as this that are still operating in your locale? Or have you been the victim of one of these scams? Read the entire article at the FTC website to read more about these forensic auditors and additional red flags to look out for: http://www.consumer.ftc.gov/articles/0130-forensic-loan-audits

Posted by Corey Curwick Dutton