Charlip Law Group L.C.

False Hope: Loan Modification And Dual-Tracking

Last updated on: May 24, 2022


After the national mortgage crisis, several state and federal homeowner protection laws and regulatory rules were passed with the goal of prohibiting service providers from taking advantage of homeowners in trouble.  Some of these laws and rules prohibited mortgage providers from dual tracking, a process that would give homeowners a false sense of security as to the status of a foreclosure to their detriment.  Although dual tracking is not as rampant as it once was, some mortgage lenders may still engage in this practice. In 2015, investigators from the Consumer Financial Protection Bureau found instances in which mortgage servicers sent notices of intent to foreclose to homeowners who were already approved for modification.

Dual tracking refers to a process through which the mortgage lender continues to pursue foreclosure proceedings against a homeowner while simultaneously conveying to the homeowner, who has applied for a loan modification, that their application is being considered.  By the time the homeowner discovers that the modification will not be approved, he or she also discovers that the foreclosure is either imminent, or the home was already sold.  If the homeowner’s home has already been sold, there may be other defenses available to the homeowner if he or she never received notice of either the foreclosure proceedings or the sale of the home.

Rules established by the Consumer Financial Protection Bureau and the terms of settlements with various banks holding mortgages prohibit dual tracking before certain deadlines have passed.  For example, a bank or mortgage lender cannot start foreclosure proceedings until a homeowner is at least 120 days delinquent, and is not supposed to continue with a foreclosure process while it has a completed loan modification application from a homeowner in review.  The mortgage lender is also required to provide one point of contact for the homeowner to work through in order to avoid confusion and the homeowner being passed on from one department to another with no answers.  If the foreclosure process has been started in court, the mortgage lender may be required to halt it until the loan modification has been reviewed.

Homeowners should note that the mortgage lender is not required to approve the loan modification application in order to be in compliance with the rules.  The requirement is only for review.  Therefore, if the modification is denied, the foreclosure process can continue and the homeowner may still lose the home.  In addition, if the homeowner rejects terms offered by the mortgage lender, or accepts modification terms and then fails to abide by the terms, the mortgage lender can continue with foreclosure proceedings.

The Consumer Financial Protection Bureau investigates complaints of dual tracking and other abuses by mortgage lenders and servicers.  In some circumstances, homeowners may also sue the mortgage servicer for dual-tracking violations in an attempt to halt a foreclosure.

Contact Us For Legal Assistance

If you are going through a foreclosure or at risk for one, you should contact an experienced foreclosure defense attorney for guidance on your rights in foreclosure.  Contact the North Miami foreclosure attorneys at Charlip Law Group, L.C. for a consultation on your case.

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