The Chicago Tribune reports that certain companies are now offering forensic loan reviews to homeowners facing foreclosure to determine if their lenders made any mistakes during the loan process that the homeowners could now use to get out of their loans.
These companies will scour loan documents looking for errors in, among other things, the truth in-lending (TIL) statement the lender or the lender's annual-percentage-rate (APR) calculations. If the TIL statement doesn't match up with the HUD-1 closing-cost sheet, a borrower might have cause for legal action against the lender.
Typically, forensic loan audits are ordered by mortgage investors to determine what kind of legal liability confronts them in the pools of loans they already own or are considering buying. As a so-called "business-to-business service," they are not generally available to individual borrowers.
Fees for this service could be as high as $3,000, depending on how much is owed on the mortgage. But if an error is found, it could provide great leverage when trying to negotiate with the banks.
One particular company says that well over 80 percent of the recent audits performed by their company have revealed major truth-in-lending violations, errors in the good-faith estimates required under the Real Estate Settlement and Procedures Act, illegal predatory lending practices or even fraud.
My question: Do these companies employ lawyers? If not, is this the unauthorized practice of law?