Looking for feedback on loan audit results

[Bopis]

Hello,

My parents and I purchased a home in North Las Vegas in March 2007 for $230,000. The house is in their name, but we split mortgage payments. My parents live in Colorado and I'm in Vegas.

The loan is zero down, 80/20. Payments total $1780/month. First Horizon services the loan.

I planned to live in the house while I was in Vegas and sell when I left town. I'm ready to move, but unfortunately selling isn't really an option as the house is now worth around $130,000.

Rents in the area for similar homes are around $1,100-$1,200, which would leave us with a monthly difference of almost $700.

We are considering trying to get a modification and hired a lawyer to perform a loan audit. We received the following list of possible violations:

1. The Truth in Lending Itemization of Fees and Costs was dated as of closing, leaving little or no opportunity to examine these charges;
2. The Note for your first loan is not executed;
3. Your HUD-1 Settlement Statement was dated March 30, 2007, after closing, which may be a TILA violation;
4. Your Good Faith Estimate does not appear to have been provided in a timely manner, which would be a violation of Regulation Z, a subset of TILA;
5. Your loan application was not signed;
6. The mortgage broker was paid a yield spread premium of $1,840.00, which may have been paid without your approval;
7. You were charged a Loan Discount of $1552.50, but it is unclear whether you received an interest rate discount;
8. Few signed documents are present for your second loan, making those claims more difficult to discern with the information we have.

He ended the report with this paragraph:

"Finally, it appears that your loan was unfair and deceptive. As a result, the loans may be unfair, insomuch as their success was predicated upon either (a) the fair market value of the property increasing or (b) your income increasing during the life of the loan, not your ability to repay. Therefore, the lender knew or should have known that the loan would fail if the housing market declined. Knowing if this allegation is true will require obtaining information from the lender."

I realize it will be impossible to make judgments about some of these potential violations without more detailed info, but I'd appreciate any feedback you guys can give me at this early stage.

What course of action would you recommend we take (legal or otherwise)? Could any of this information be used to help obtain a modification or rescission? Is that last paragraph accurate, or do you think it's just something they tack onto every letter in order to drum up more business?

Thanks for your help. I'll be happy to provide more info as needed.

-Sean

[Dan Bailey]

Sean,
Glad you found the forum and posted.
The majority of the loans folks have , have some sort of violations in varying degrees. In the hands of a layman (regular people like you and I) the violations do not do much. When attempting a loan mod with an attorney, the attorney may be able to use them to some degree as leverage to obtain a mod-or improve the modification terms .

Since the property is not a primary residense, it will be a bit tougher to receive a favorable modification. (will not fit into any govnt. plan)

You'll need to make the choice/decision as to whether fighting for a mod is feasable.

[Dan Bailey]

PS:
I would direct you to a similar question that was asked, and an attorneys answer: Does this qualify me for a modification

[Bopis]

Thanks, Dan.

After some discussion, my parents and I are considering walking away. Any insights as to whether or not this information could be used to defend against a possible deficiency judgment? Or, at the very least, could we use any of this as leverage when negotiating a settlement with lenders?