A forensic audit is a specialized branch of accounting. The auditor delves into the financial records of an individual or firm with the intention of finding evidence of impropriety or criminal activities. The ultimate aim is to use any evidence unearthed as a basis for filing a lawsuit or criminal charges against the defendant in question.
This field of accounting can be initiated as a proactive exercise or a reactive measure. The proactive one may be used by a company for fulfilling compliance regulation requirements, or as a diagnostic tool that helps them determine the efficiency of their financial oversight system. A large accounting firm is expected to maintain a separate department to handle annual auditing requirements of each client's financial records.
The reactive type is much more in need and often a task of vital importance. In this case, the auditor gets called in after allegations of impropriety or criminal behavior have been made, or just to confirm suspicions. Attorneys build criminal prosecutions based on this evidence, and the auditor can be called to court as an expert witness.
It's public knowledge now that fraudulent and dishonest behavior by mortgage lenders played a big part in the subprime crisis. This led to the subsequent real estate market crash with millions of home-owners going underwater and being foreclosed. Many home owners have fought back by filing lawsuits against their lenders alleging fraud in the mortgage papers.
The perception now is that anyone who has received a foreclosure notice can file a lawsuit against the lender as part of a strategy to save the home. The thinking is that lenders faced with a lawsuit may be more willing to offer a loan modification. It's not really so simple, but it does push lenders who are otherwise cold-hearted towards finding a better solution.
Finding evidence to prove that a lender is in violation of a federal law such as the Real Estate Settlement Procedures Act (RESPA) is easier said than done. It needs a complete securitization audit. All records associated with the transaction, whether on paper or in digital form, have to be checked carefully. This is being done by professionals now in states such as New Jersey.
The auditor and a loan modification New Jersey lawyer will work with the home owner to find evidence of wrongdoing on the part of the lender. Anything illegal or even an unreported error that turns up in the forensic audit may be enough to use as leverage. The ultimate aim is to get the lender to sign off on a loan modification arrangement. Sometimes, strong evidence may even be used to write-off the entire mortgage balance.
This field of accounting can be initiated as a proactive exercise or a reactive measure. The proactive one may be used by a company for fulfilling compliance regulation requirements, or as a diagnostic tool that helps them determine the efficiency of their financial oversight system. A large accounting firm is expected to maintain a separate department to handle annual auditing requirements of each client's financial records.
The reactive type is much more in need and often a task of vital importance. In this case, the auditor gets called in after allegations of impropriety or criminal behavior have been made, or just to confirm suspicions. Attorneys build criminal prosecutions based on this evidence, and the auditor can be called to court as an expert witness.
It's public knowledge now that fraudulent and dishonest behavior by mortgage lenders played a big part in the subprime crisis. This led to the subsequent real estate market crash with millions of home-owners going underwater and being foreclosed. Many home owners have fought back by filing lawsuits against their lenders alleging fraud in the mortgage papers.
The perception now is that anyone who has received a foreclosure notice can file a lawsuit against the lender as part of a strategy to save the home. The thinking is that lenders faced with a lawsuit may be more willing to offer a loan modification. It's not really so simple, but it does push lenders who are otherwise cold-hearted towards finding a better solution.
Finding evidence to prove that a lender is in violation of a federal law such as the Real Estate Settlement Procedures Act (RESPA) is easier said than done. It needs a complete securitization audit. All records associated with the transaction, whether on paper or in digital form, have to be checked carefully. This is being done by professionals now in states such as New Jersey.
The auditor and a loan modification New Jersey lawyer will work with the home owner to find evidence of wrongdoing on the part of the lender. Anything illegal or even an unreported error that turns up in the forensic audit may be enough to use as leverage. The ultimate aim is to get the lender to sign off on a loan modification arrangement. Sometimes, strong evidence may even be used to write-off the entire mortgage balance.
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