One of the ways that servicers or investors can excise nonperforming assets from their portfolios is to try to put them back to originators by claiming fraud and/or breach of representations and warrants. Potential malfeasance like this is uncovered via forensic audits, which have become increasingly popular since the mortgage crisis hit. While forensic auditing for this purpose has typically been limited to institutions – investors, servicers, originators and mortgage insurers – the practice has now spread to the retail borrower, as described in today’s MortgageOrb article “When Forensic Loan Audits Are Used Against Lenders.”
This phenomenon has even touched Cogent. Recently, we’ve been approached by a handful of clients to help them extract loan audit data from their Cogent systems for the purpose of forensic loan auditing. Typically, this is in support of litigation in which opposing counsel requires every scrap of data that could be relevant. Without a knowledge of both the mortgage quality control workflow and the application supporting it, this can be difficult for clients to accomplish on their own, especially after layoffs have reduced knowledgeable staff.
Although projects like this are outside Cogent’s normal scope of work, we have the expertise to help clients. More than anything, though, this is yet another reminder of why robust quality control is imperative in today’s world.