Forensic Malarkey

November 01, 2011

By Edward Johnson

When you think of the word “forensic” the general image most people conjure up is one of a scientist, criminalist or medical specialist doing exhaustingly detailed work. The use of word most certainly carries an official and authoritative sense to it. Perhaps that is why the word has entered into the consumer marketplace lexicon in ways that are dubious. Yep, problematic and scam companies are now using the word to describe their purported services and some have even used the word as part of their company name. For unknowing consumers, there is no rest for the weary.

If you are like many consumers you may have recently received a mass-marketed letter in the mail offering a “forensic” mortgage loan audit. The use of the word “forensic” with “audit” certainly gives a Perry Mason or CIS feel. What you may not know, is that from the time the mortgage crisis began, fraudulent foreclosure rescue offers have been using half-truths and outright lies to peddle services promising relief to homeowners in distress. Many of the people doing the “forensic audits” have no legal or accounting certification and are simply using software programs. The reality is that the words are the “terms-dejour” to get your attention. According to the Better Business Bureau’s (BBB) files, experience, and research many of the companies offering such services are only providing hope, and false hope at that.

How it works is that in exchange for a hefty upfront fee the so-called forensic loan auditors offer to review your mortgage documents to determine if your lender complied with mortgage laws and requirements. These supposed forensic gurus will lure you in by telling you that the audit can be used to avoid foreclosure, accelerate a modification, reduce principle or even get you out from your loan all together. This is where the malarkey comes.

According to the Federal Trade Commission (FTC) there is no evidence that forensic loan audits will help with a modification or foreclosure, even if a real auditor or attorney performs the audit. In addition, when an error is found in your loan documents and you sue and win, your lender is not required to modify your loan to make payments more affordable. Now you are out the cost of the audit and the lawsuit.

The best thing you can do if you are in mortgage distress, is contact your lender and keep the lines of communication with them open and see what direct forms of relief you can work out. You can also call 1888-995-HOPE for free personalized advice from counselors certified by the U.S. Department of Housing and Urban Development (HUD). The hotline is operated by the Homeownership Preservation Foundation.

The BBB and the FTC offers the following tips on spotting a foreclosure prevention scam. Be careful when the company:

►guarantees to stop foreclosure
►instructs you NOT to contact your lender, lawyer or credit counseling professional
►demands upfront fee payments or requires payment by cashiers check or wire transfer
►suggests you to lease your home so you can buy it back over time
►recommends you make mortgage payments to someone other than your lender
►advices you to transfer title or the deed to someone else

As for companies that use the word “forensic” in their name, just ask Forensic Case Management if it truly defined who they were as a company. It operated a nationwide collection agency and BBB complaint files show that it used unethical collection practices, high pressure tactics, misrepresented disclosures concerning fees and policies, refused to validate debts and were just plain rude. Not exactly a “forensic” service. The FTC recently shut them down.

Be careful out there.

Edward Johnson is president & CEO of the Better Business Bureau serving the greater metro Washington, D.C. region.