Some mortgage servicers offer loan modifications to delinquent homeowners, but while the review for the loan modification is underway, they proceed with the foreclosure suit. With this once popular practice known as dual tracking, homeowners falsely believed they would avoid foreclosure only to be denied a Florida loan modification just weeks away from the scheduled foreclosure sale. However, there are now laws and legal rules that protect homeowners from dual tracking.
In 2014, the Consumer Financial Protection Bureau (CFPB) put into effect mortgage servicing rules that made dual tracking illegal. Under the CFPB rules, a mortgage servicer cannot proceed with a foreclosure suit unless the homeowner is more than 120 days delinquent on their monthly payments. If the homeowner files an application for loss mitigation or a loan modification more than 37 days before a scheduled foreclosure sale, the servicer cannot go forward with the foreclose while the application is being processed or until the homeowner:
- is found not eligible for loss mitigation or loan modification
- rejects the options offered by their servicer
- accepts a workout option, but fails to comply with the trial modification’s terms
In 2012, the federal government and 49 state attorney generals reached a settlement with the country’s five largest banks called the National Mortgage Settlement. It included restrictions on dual tracking similar to those imposed by the CFPB. An additional rule prevents servicers from proceeding with a foreclosure if the delinquent homeowner submits a loan modification application at least 15 days before the scheduled foreclosure sale.
Despite these restrictions, some unscrupulous banks and mortgage servicers continue the practice. According to a report by the CFPB, homeowners can still become victims of illegal dual tracking. In fact, many homeowners do not realize they are victims of dual tracking until it is too late.
If you are a homeowner facing foreclosure and would like to avoid losing your home due to dual tracking, consult with a qualified Miami foreclosure defense attorney.
At Graham Legal, we are experts at filing for loan modifications on behalf of our clients. Our Miami foreclosure defense attorneys will simultaneously process your Florida loan modification while defending your case. Call us today for a free consultation.