If You’re Facing Foreclosure Learn How to Use a Mortgage Audit to Reduce Debt

Borrowers facing foreclosure because of default on payments can use mortgage audit as a means of getting their mortgage terms softened. However, there are drastically differing views on whether this tactic will actually work.

While supporters agree that an audit could uncover anomalies in the mortgage agreement, which can become a strong bargaining point in favor of the borrower, others state that the audit may well bring in more bills to be paid without concrete benefits.

98% of the audits done by the Consumer Mortgage Audit Center reveal breaches, say industry insiders. This gives the impression that most loans are processed without proper background checks determining whether the borrower can actually fulfill his obligations. In such cases, the audit can put the onus on the lender and lessen the burden on the borrower. Homeowners facing foreclosure can get advice from a legal advisor or a consumer group once their audit reveals any anomalies. With this kind of help, the borrower can get the lender to modify the loan to more favorable terms.

However, some consumer groups and legal advisors have a different view about the effectiveness of audits. They point out that the anomalies uncovered by the audit will still have to be taken to court, which means that court fees and other costs will have to be borne by the borrower. They also highlight the fact that only a small percentage of such cases have been successful.

When a borrower intends to go for an audit to modify his loan to a more favorable one, he will have a chance of success only if he hires an attorney who knows the subject well. There are many attorneys who only have theoretical knowledge and practically no experience with such cases. Hiring such an attorney can prove disastrous.

In addition, an audit may uncover minor anomalies but these may not warrant a change of terms in your favor. There have also been many cases where the judges have set aside the borrower’s plea on the basis of lack of evidence. Making a bid for loan modification with an audit may also cause the lender to be disinclined to get into negotiations on terms on the loan, as it would encourage more of these cases in future.

So before you resort to a loan audit you should consider all costs involved and take such a measure only if you have a solid case in your favor.

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