U.S. Lender Audit provides the results of the Nation's most comprehensive and accurate forensic lender audit in a simple-to-read format. Please read below as to the specifics of a Forensic Loan Audit.
Document Review
Determine whether the information in the preliminary loan application, final application and all credit documents is consistent or reconciled.
Determine whether the appraised value was established using reasonable comparables, reasonable adjustments, and in expectation of repairs required to meet minimum safety and soundness requirements.
Determine whether a field review was performed if the value of the property increased 20% or more within 12 months of a previous sale
Determine whether loan documents requiring signature (other than blanket verification releases) were signed by the mortgagor or employee(s) of the mortgagee only after completion; and that all corrections were initialed by the mortgagor or employee(s) of the mortgagee.
Determine whether verifications of employment, verifications of deposit or credit reports are suspect due to handling by any interested third party or the mortgagor.
Determine whether the loan file contains a financial statement, tax returns and the appropriate type of credit report if the mortgagor is self-employed.
Determine whether more than one credit report was ordered and whether all credit reports were submitted with the loan package to the underwriter
Determine whether the loan file contains pertinent documentation of the mortgagor's source of funds for the required investment, the acceptability of that source, and that any obligation (if any) to repay the funds is included on Form HUD‑92900 (MCAW). This is especially important in cases where the source was other than the applicant's accounts at a financial institution.
Determine whether all conflicting information or discrepancies in the application file were resolved and properly documented in writing prior to submission of the loan for underwriting
Determine whether there are sufficient and documented compensating factors if the debt ratios exceed loan program limits.
Determine the accuracy and completeness of underwriting conclusions and mortgagee documentation.
Determine whether all conditions were cleared prior to closing
Determine whether the HUD‑1 Settlement Statement (HUD-1) was accurately prepared and properly certified. Assure that only allowable fees and charges were paid by the mortgagor. The HUD‑1 should be compared with other relevant loan documents to determine whether the mortgagor made the required minimum investment
Determine whether the loan file contains all required loan processing, underwriting and legal documents.
(FHA) Determine whether the loan was submitted for insurance within 60 days of closing or included a payment history showing the loan was current when it was submitted for mortgage insurance.
Determine whether the seller acquired the property at the time of or soon before closing, indicating a possible property "flip."
|If possible, determine whether the mortgagor transferred the property at the time of closing or soon after closing, indicating the possible use of a "strawbuyer" in the transaction
Determine whether all items requiring documentation have been properly evidenced and retained in the file
(FHA) Determine that no one is employed for HUD origination, processing, underwriting or servicing who is debarred, suspended, subject to a Limited Denial of Participation (LDP) or otherwise restricted from participation in HUD/FHA programs. HUD recommends a periodic check of the employee list, at least semi-annually.
Determine whether relevant loan documents were signed in blank by the mortgagor or employee(s) of the mortgagee; and that all corrections were initialed by the mortgagor or employee(s) of the mortgagee.
Determine whether the loan is subject to any HOEPA laws and all appropriate high cost lending disclosures were made
Determine whether verifications of employment, verifications of deposit and the credit report were handled by any interested third party or the mortgagor.
Determine if more than one credit report was ordered; determine whether all credit reports were submitted with the loan package to underwriting.
Determine whether the preliminary loan application lists each outstanding liability and each asset of the mortgagor that was used to qualify for the mortgage.
(FHA) Determine whether any outstanding judgments shown on the credit report were shown on the Form HUD 92900 with an accompanying explanation and documentation. Explanations are not acceptable where there is a delinquency or judgment involving debt to the Federal Government.
Determine whether the loan file contains pertinent documentation if the mortgagor's source of funds for the required minimum investment was other than deposits in a savings institution and whether the source of funds was verified.
Determine if gift letters state the relationship of donor to mortgagor, are free of any obligation to repay the gift, and that gift funds were deposited into the mortgagor's account.
Determine whether there was written re-verification of the mortgagor's employment, deposits, gift letter or other source of funds and a new credit report reordered.
(FHA) Determine whether all conflicting information or discrepancies were resolved and properly documented in writing prior to submission of the loan to HUD-FHA for mortgage insurance endorsement.
This involves comparison of the preliminary loan application and original verifications of employment, verifications of deposit, final loan application Form HUD 92900 and all re-verification documents.
Determine whether a field review of the appraisal was performed.
Determine the accuracy and completeness of underwriting conclusions and mortgagee documentation.
Documents Reviewed Include (but not limited to):
The Majority of Your Documents will be Found All In One Source: The Closing Paperwork to Your Loan! Additional Documentation and Replacement Documents can be Sent to You by Contacting The Title Company who Closed the Loan and the Lender who Originated And/Or The Lender that Currenty Holds the Note.
Initial 1003
Good Faith Estimate
Truth in Lending
Verification of Employment
Verification of Deposits
Verification of Mortgages
Gift Letters
Tax Returns
Bank Statements
W-2's
Paystubs
Credit Reports
Letters of Explanation
Appraisal
1008
Purchase Agreement
Loan Approval & Conditions
Title Commitment
Survey
Final Application
Borrower Identification
FHA & VA Insurance Certificates
Agency Disclosures
Warranty Deed
Recorded Deed of Trust
PMI Insurance
Note
Deed of Trust
HUD 1
Compliance Agreement
Loan Pay-offs
Assignments
Note/DOT Riders
Title Policy
Insurance Policy
Real Estate Tax
CONTACT US FOR NEXT STEPS
Pre-Funding Loan Audit Procedures
Loan Selection
Prior to submission to underwriting all loans will undergo a 24 hour evaluation.
Document Review and Verification
Credit Report
A complete and thorough review of the credit report and a comparison of the credit report to the loan application.
Verifications
All verifications, gift letters, other credit related documents, and the original loan will be re-verified.
Re-verification requests will be done via the telephone. Incomplete or unsuccessful re-verification will be noted.
Credit Document Re-verification
Documents contained in the loan file will be checked for sufficiency and subjected re-verification. Examples of items that will be re-verified include, but are not limited to, the mortgagor's employment or other income, deposits, gift letters, alternate credit sources, and other sources of funds. Sources of funds must be acceptable as well as verified. Other items that may be re-verified include mortgage or rent payments. Any discrepancies will be explored to ensure that the original documents (except blanket verification releases) were completed before being signed, were as represented, were not handled by interested third parties and that all corrections were proper and initialed. All conflicting information in the original documentation should be resolved before the complete file was submitted to the underwriter.
Appraisals.
A desk review of the property appraisal will be performed on all loans except streamline refinances and HUD Real Estate Owned (REO) sales.
The desk review will include a review of the appraisal data, the validity of the comparables, the value conclusion ["as repaired" to meet safety and soundness requirements in HUD Handbook 4905.1 (as revised)], any changes made by the underwriter and the overall quality of the appraisal.
Occupancy Re-verification
In cases where the occupancy of the subject property is suspect, an attempt to determine whether the applicant is going to occupying the property will be made.
The Pre-Funding review will attempt to:
Determine whether the information in the preliminary loan application, final application and all credit documents is consistent or reconciled.
Determine whether the appraised value was established using reasonable comparables, reasonable adjustments, and in expectation of repairs required to meet minimum safety and soundness requirements. Determine whether a field review was performed if the value of the property increased 20% or more within 12 months of a previous sale.
Determine whether loan documents requiring signature (other than blanket verification releases) were signed by the mortgagor or employee(s) of the mortgagee only after completion; and that all corrections were initialed by the mortgagor or employee(s) of the mortgagee.
Determine whether verifications of employment, verifications of deposit or credit reports are suspect due to handling by any interested third party or the mortgagor.
Determine whether the loan file contains a financial statement, tax returns and the appropriate type of credit report if the mortgagor is self-employed
Determine whether more than one credit report was ordered and whether all credit reports were submitted with the loan package to the underwriter
(FHA)Determine whether outstanding judgments shown on the credit report were shown on the Form HUD‑92900 (Mortgage Credit Analysis Worksheet {MCAW}) and acceptably explained in accompanying documentation
Determine whether the loan file contains pertinent documentation of the mortgagor's source of funds for the required investment, the acceptability of that source, and that any obligation to repay the funds is included. This is especially important in cases where the source was other than the applicant's accounts at a financial institution.
Determine whether all conflicting information or discrepancies in the application file were resolved and properly documented in writing prior to submission of the loan for underwriting
Determine whether there are sufficient and documented compensating factors if the debt ratios exceed lender limits
Determine the accuracy and completeness mortgagee documentation
Determine whether the HUD‑1 Settlement Statement (HUD-1) was accurately prepared. Assure that only allowable fees and charges were paid by the mortgagor. The HUD‑1 should be compared with other relevant loan documents to determine whether the mortgagor is making the required minimum investment.
Determine whether the loan file contains all required loan processing, underwriting and legal documents
If possible, determine whether the mortgagor is transferring the property at the time of closing or soon after closing, indicating the possible use of a "straw buyer" in the transaction.
Determine whether all items requiring documentation have been properly evidenced and retained in the file.
(FHA) Determine that no one is employed for HUD origination, processing, underwriting or servicing who is debarred, suspended, subject to a Limited Denial of Participation (LDP) or otherwise restricted from participation in HUD/FHA programs. HUD recommends a periodic check of the employee list, at least semi-annually.
Determine whether each loan file contains all required loan processing, underwriting and legal documents.
Determine whether relevant loan documents were signed in blank by the mortgagor or employee(s) of the mortgagee; and that all corrections were initialed by the mortgagor or employee(s) of the mortgagee.
Determine whether the preliminary loan application lists each outstanding liability and each asset of the mortgagor that was used to qualify for the mortgage.
Determine whether any outstanding judgments shown on the credit report were with an accompanying explanation and documentation.
Determine whether the loan file contains pertinent documentation if the mortgagor's source of funds for the required minimum investment was other than deposits in a savings institution and whether the source of funds was verified.
Determine if gift letters state the relationship of donor to mortgagor, are free of any obligation to repay the gift, and that gift funds were deposited into the mortgagor's account.
Determine whether there was written re-verification of the mortgagor's employment, deposits, gift letter or other source of funds and a new credit report reordered.
Determine whether all conflicting information or discrepancies were resolved and properly documented in writing prior to submission of the loan to underwriting. This involves comparison of the preliminary loan application and original verifications of employment, verifications of deposit, final loan application and all re-verification documents.
Determine the accuracy and completeness of underwriting conclusions and mortgagee documentation.
Determine that all applicable RESPA documents are in the files and properly executed.
Determine that state regulations have been met.
Determine that mortgage files meet HOEPA/Section 32 Mortgage requirements.
Pre-Funding Loan Audit Procedures
Documents Reviewed Include (but are not limited to):
Initial 1003
Good Faith Estimate
Truth in Lending
Verification of Employment
Verification of Deposits
Verification of Mortgages
Gift Letters
Tax Returns
Bank Statements
W-2's
Paystubs
Credit Reports
Letters of Explanation
Appraisal
1008
Purchase Agreement
Title Commitment
Survey
Final Application
Borrower Identification
Agency Disclosures
HUD 1
Compliance Agreement
Loan Pay-offs
Assignments
Insurance Policy
Real Estate Tax
APR Tolerance
