During the boom times, when the housing bubble was getting bigger by the minute and everybody who normally would have been wearing a hairnet and saying, "Would you like fries with that?" a few hundred times a day was brokering mortgages instead (or selling real estate), let's just say that, "mistakes were made."

Lots and lots of mistakes.

So?

So, now thousands of those mortgages are going into default and people are losing their homes at the worst rate in U.S. history, even worse than during the Great Depression. Usually, when borrowers approach their mortgage lenders and ask to modify the loan at a lower interest rate or renegotiate the terms, they not only are unsuccessful, they often can't even find out who owns the mortgage anymore. The get on the 800 number merry go round and five hours later want to just burn the place down.

Many subprime mortgages were sold so many times to so many different entities, that often no one even knows who holds the original mortgage note or knows where the original note is.

Technically, a lender can't foreclose on a property unless that lender holds the original note. What's more, many, many, many federal and state regulations exist to protect borrowers from unscrupulous lender practices. If any of these regulations are violated (and there are dozens, of them), the lender can face fines of up to $10,000 and can even lose the ability to write mortgages. The lender can be sued by the federal government and lose its charter as a bank or financial institutions. It's no small thing, to be found in noncompliance. 

Many of these regulations involve simple disclosures that must be made to the borrower at critical times during the lending process. If the lender skips any of these disclosures, that lender can be in big trouble. Many subprime lenders and a goodly number of major banks and financial institutions did not comply with these regulations fully during the bubble.Some were so out of compliance their activities constitute fraud.

A forensic mortgage audit goes over the closing papers for a specific mortgage and reviews the signed disclosures to look for any indication that any of these regulations were violated. The purpose of this audit is to give the borrower leverage in negotiating a loan modification instead of a foreclosure.

The idea is not to get your home for free, but to coerce the lender into working with you.

If you think you might benefit from this process, don't hire someone you find on the internet. Hire an attorney experienced in real estate and loan modifications, and preferably one who has done forensic mortgage audits before.

You can also order kits and try it yourself.

It's boring. It's tedious. It's not free.

But it can work.