As part a commercial loan workout, a forensic loan audit may be performed to uncover any errors when the commercial mortgage was originally issued.
During the commercial real estate boom of early to mid 2000's, a fair amount of mortgage loans had inaccuracies and federal violations. Since a large number of commercial borrowers are defaulting on their loans, commercial forensic loan audits in addition to a commercial loan workout can help uncover any errors in the loan documents and misleading contract language. Federal legislation was also passed to protect consumers from vague or unclear information on the cost of obtaining a mortgage loan.
TILA, or the "Truth In Lending Act" give borrowers a standard way of determining the cost and terms of a mortgage loan. Borrowers now can make educated decisions on whether or not to proceed with the loan and shop around for alternatives. REPSA, or the "Real Estate Settlement Procedures Act" was passed to spell out all charges and fees associated with real estate transactions and to prevent lenders from giving referral fees to closing agents or settlement providers. Forensic loan audits for commercial mortgages if needed, should uncover any federal violations of the law.
Forensic loan audits can be a very valuable tool when errors or violations are discovered to obtain a commercial loan workout. Commercial loan workouts once approved by the lender can reduce the interest rate, waive late fees, arrange repayment plans and/or extend loan terms.
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