Little known facts about adjustable rate mortgages (ARM’s)

by on May 2, 2009

Many homeowners are not aware of some common errors with ARM’s. The difference in over-payments can be significant especially when you add it up over the life of your loan.

Mortgage audits can detect ARM errors, bringing the loan into compliance and getting many families a mortgage refund.

Here are a few examples of common ARM mistakes:

1. Rounding an equation incorrectly, such as rounding up instead of to the nearest 1/8 of 1%, which is a fairly common error.

2. Selecting the wrong index, incorrect type of index or value.

3. Incorrect monthly payment factor, despite having a correct payment rate.

4. Correct index selection, but math mistakes leading to an incorrect rate.

5. An incorrect loan balance.

6. Data input errors, mistyped entries, faulty computer software or an ambiguously written loan note.

7. The loan was sold or transferred to a different company.

8. A rider, handwritten changes or other irregularities exist in the note.

9. Very complex calculations are needed, using an unusual index or interest rate.

10. Your loan balance has not decreased significantly.

11. The original loan was made by an institution that has been dissolved or merged with another company.

Most families should have their loan reviewed for a loan modification. If a family thinks they are the victim of predatory lending, then they probably are. Mortgage Loan Audit Services allows borrowers to get help they need to get examinations of pre-close or post-close loan documents for Federal and State specific financing guidelines. These violations include the Real Estate Settlement Procedures Act (RESPA), High Rate / High Fee Loans (HOEPA/Section 32 Mortgages), Truth and Lending Act (TILA), State Consumer Credit Regulations, Secondary Market Criteria and many other State Specific Regulations.

The sad truth is that most loans closed between 2000-2006 were performed with illegal violations. Only a small fraction of the loans that were closed were done with the borrowers’ best interests in mind.

The majority of loans have significant Federal and State violations. These mortgage finance violations carry very harsh financial penalties for the lender and can result in legal consequences to the lender. Lenders are now forced to modify a borrowers’ current loan.

Get your mortgage loan audit right away and see if you qualify.

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