ARM Audits are designed to determine whether your client's servicing agent made errors when re-calculating their loan payment. Unlike a 30-Year Fixed-Rate Mortgage (FRM) loan, adjustable rate mortgages (ARMS) have variable interest rates based on changing index values; this varying index will cause your client's mortgage payment to change many times over the life of the loan. How often and how much an ARM adjusts is often based on complex provisions that most homeowners simply don't understand. In the best of times, this process would be challenging for a servicing agent to properly manage, but these are not the best of times and most ARMS have changed hands many times resulting in spotty quality control and poor compliance.

Why haven't I heard about this process before?

Until recently Loan Servicing reviews were performed, if at all, by the big banks on their own loans portfolios for internal compliance. And, as you might guess those results are not usually made public.

Are these errors common?

Yes. Not all ARMS  have errors, but many do. Well respected publications such as the Wall Street Journal, Money, Forbes and Newsweek, have all reported that up to one-third of all loans show some evidence of serious miscalculations. If your client's servicing agent used the wrong index value, or calculated the figures incorrectly or failed to properly credit additional principal payments, your client's ARM adjustment could have easily been miscalculated. If your client's loan had problems, how would you know?

How can this report help my client?

Working under the supervision of our client attorneys, AmStar's forensic team will review the loan documentation and send you a detailed report identifying the correct indices, interest rates, monthly payments and loan balances that should have been reflected on your client's statements. If your client's mortgage statements do not match the numbers in the audit report, they may have been overcharged. In the event of an action against the servicing agent by your firm to recover overpayments, our experts will be available to testify at no additional charge.

What about professional liability?

Practicing law is difficult in the best of times and even when your firm does its best, cause for complaints always seem in ready supply. Loan modifications can be an effective solution for many clients, but proceed with caution. Despite your best efforts, according to the Office of Comptroller of the Currency (OCC) statistics, after eight months, 58% of borrowers had re-defaulted. Conducting a Loan Servicing review ensures that your client made a full informed decision. Conducting the review also ensures that you left no stone unturned and lets you close that client file with confidence.

If you would like to learn more about Amstar's Forensic Loan Auditing Services, contact us toll-free at
877-550-5878, drop us an e-mail at sales@amstarlit.com, or order now.