www.CertifiedForensicLoanAuditors.com SAMPLE …

1 _____ - 1 - 1 CERTIFIED FORENSIC LOAN AUDITORS, LLC 13101 West Washington Blvd., Suite 140, Los Angeles, CA 90066 Ph: 310-432-6304; Forensic Audit Report Prepared for: Law office of Mike Man Borrower(s): Joe Doe and Jan Doe Property: 123 Any Street, Any Town IL 60447 October 8, 2010 SAMPLE AUDIT_____ - 2 - 2 TABLE OF CONTENTS Advisory Letter 3 Introduction 4 Report Summary 5 Summary of Loan Terms 8 Financial & Underwriting Analysis 9 Truth in Lending Act Analysis 11 HOEPA Analysis 13 RESPA Analysis 14 Predatory Indicators 15 Potential Additional Claims Analysis 18 Discrimination Fraud Foreign Language Translation Breach of Contract Breach of Implied Covenant of Fair Dealing Breach of Fiduciary Duty Unjust Enrichment Unconscionability Civil Conspiracy Unfair/Deceptive Business

2 Practices Other Claims & Recommended Legal Research 19 SAMPLE AUDIT_____ - 3 - 3 10/8/2010 Law of Office of Mike Man 444 N. Avenue Anytown, IL 60657 Re: Forensic Audit for Mr. and Mrs. Joe Doe Loan # 1st-7184, 2nd-71845 & Wells Fargo #8967 Dear Mike Man: The loan transaction for the above-referenced borrower/property has been audited1 for violations of the Truth in Lending Act [15 1601] ( TILA ), Home Ownership Equity Protection Act [12 et seq.] ( HOEPA ), the Real Estate Settlement Procedures Act [12 2601] ( RESPA ), and to the extent applicable, violations of other state and federal laws discussed below. This report was based exclusively on the documentation provided.

3 It also required that we make reasonable assumptions respecting disclosures and certain loan terms that, if erroneous, may result in material differences between our findings and the loan s actual compliance with applicable regulatory requirements. While we believe that our assumptions provide a reasonable basis for the review results, we make no representations or warranties respecting the appropriateness of our assumptions, the completeness of the information considered, or the accuracy of the findings. The contents of this report are being provided with the understanding that we are not providing legal advice, nor do we have any relationship, contractual or otherwise, with anyone other than the recipient.

4 We do not, in providing this report, accept or assume responsibility for any other purpose. Sincerely, Marla Giddings Certified Senior Forensic Loan Auditor CERTIFIED FORSENIC LOAN AUDITORS 13101 West Washington Blvd., Suite 140 Los Angeles CA 90066 310-432-6304 1 Please note that a complete mortgage servicing audit ( , audit for RESPA and/or breach of contract violations for the entire servicing history of the loan) is not included in this audit; QWR recommended before such audit can be accomplished. SAMPLE AUDIT_____ - 4 - 4 INTRODUCTION Interested Parties: ORIGINAL MORTGAGE LENDER/TABLE FUNDER: ESCROW/TITLE: MORTGAGE NOMINEE/BENEFICIARY: Draper and Kramer Mortgage Corp.

5 100 W. 22nd Street, Ste 101 Lombard, IL 60148 2nd-Wells Fargo Servicing Center MAC B6955-01B Box 31557 Billings, MT 59107 First American Title Insurance Company 27775 Diehl Road Warrenville, Il 60555 MERS Mortgage Electronic Registration Systems, Inc. Box 2026 Flint, MI 48051 MORTGAGE BROKER: MORTGAGE TRUSTEE: SECURITIZATION: Green Valley Mortgage, Inc. Likely. See discussion below. Documents Provided for Review: 1st 2nd X X Loan Application (Form 1003) Loan Commitment Letter MISSING Good Faith Estimate MISSING X X Truth in Lending Disclosure Statement X (3-Day) Notice of Right to Cancel (may not find with purchase money loans) ONLY 1 COMPLETED COPY, 4 COPIES ARE REQUIRED X HUD-1 (or HUD-1A) Settlement Statement X Note (with riders or attachments) MISSING ON THE 2ND X X Deed of Trust Underwriting and Transmittal Summary (Form 1008)

6 MISSING Appraisal Report MISSING X RESPA servicing disclosure MISSING ON THE 2ND Hazard Insurance disclosure MISSING Credit score disclosure MISSING Lender s Closing Instructions MISSING Affiliated Business Arrangement Disclosure MISSING N/A I/O and/or Neg-Am disclosure N/A ARM disclosure SAMPLE AUDIT _____ - 5 - 5 REPORT SUMMARY Total Potential TILA Violations (see p. 11): 8 Total Potential HOEPA Violations (see p. 13): 0 Total Potential RESPA Violations (see p. 14): 4 Total Predatory Lending Violations: (see p. 15): 7 CLAIM CONCLUSION DETAILS Underwriting FAIL See p. 9. TILA APR Tolerance Test FAIL See pp. 11-12. TILA Finance Charge Test FAIL See pp.

7 11-12. TILA Right of Rescission FAIL See pp. 11-12. Predatory Indicators FAIL See p. 15. Discrimination* POSSIBLE See discussion at p. 18.. Fraud* FAIL See discussion at p. 19. Other State/Common Law Claims* POSSIBLE See discussion at p. 19. *(Probability of Violations Ratings: No Evidence or Possible) Auditor's Summary: The borrower s refinanced a loan they had for less than 1 year. They paid off the existing mortgage with a new 1st in the amount of $628, and 2nd in the amount of $67, The first loan is a 30 year fixed loan. The interest rate is with a monthly payment of $4, (P&I). The national average for a 30 year fixed rate for the week ending 07/14/2006 was Typically borrowers lock their loans in 30 prior to closing so that is why I went back to the history of that time.

8 The monthly payment is $4, That is a difference of $ per month and $58, over the life of the loan. The second loan has a balloon payment of approximately $64, just after 5 years! The payment is $ I am unable to determine the actual interest rate, but it is around The amortization for this loan is approximately 30 years. I was unable to come up with the same calculations as the Federal Truth in Lending, but I did get numbers close to it so I was able to make an approximation. This loan is HIGHLY PREDATORY due to the short term! The CLTV(Combined Loan to Value) is and if the property depreciates slightly, then borrower s obligation becomes greater than the value.

9 Typically when a balloon payment comes due, the borrower s would refinance again and pay off the balloon payment, but the borrower s could not do this if the property looses value and it SAMPLE AUDIT_____ - 6 - 6 becomes underwater . Predatory Lending -Unfair Business Practices Deceptive Business Acts -are all possible violations of this loan. I am not able to comment more on the 2nd due to the lack of documentation. A copy of a Notice of Right to Cure Default dated 09/25/2008 from Wells Fargo Servicing Center is in the file. A Notice Required by the Fair Debt Collection Practices Act is also in the file. Underwriting Standards: I believe the income used to approve this loan was stated by the borrower.

10 The lender used a stated income product for approval based on the value of the collateral used as the security for the loan. Typically, such credit is underwritten predominantly on the basis of the liquidation value of the collateral, without regard to the borrower s ability to service and repay the loan according to its terms absent resorting to that collateral. When a loan has been made based on the foreclosure value of the collateral, rather than on a determination that the borrower has the capacity to make the scheduled payments under the terms of the loan, based on the borrower s current and expected income, current obligations, employment status, and other relevant financial resources, the lender is effectively counting on its ability to seize the borrower s equity in the collateral to satisfy the obligation and to recover the typically high fees associated with such credit.