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'Dual Tracking' Increasingly an Issue for Housing Regulators and Attorneys General

April 20, 2011

Our Norco foreclosure defense lawyers have written here before about the unfair but industry-standard practice among banks of starting foreclosure proceedings while they're still considering whether to grant a loan modification. An April 14 article in the Los Angeles Times gives the practice another name: "dual tracking," which is the name used by banks. Consumers and their advocates say the practice is unfair and deceptive because it misleads homeowners and doesn't give them a full chance to modify their loans. Regulators and politicicians have made several attempts to restrain the practice, including forbidding it in HAMP rules, federal agreements that limit parts of the practice and proposed legislation in state and federal legislatures.

The Times illustrated the problem with the story of Shirley Robinson of Oxnard. Robinson owned the home she lived in and another property when her small business lost clients. When her primary home was put up for foreclosure sale, she got Chase to postpone that sale so she could apply for a loan modification. Then she sent in her application -- three times, because Chase claimed paperwork was missing from the first two packages she sent. On the same day she sent in her third package -- ahead of the deadline Chase had set -- the bank sold her home at a foreclosure auction. She is now suing Chase, claiming it essentially stole the equity she had in the home. A ban on dual tracking is part of the proposed robo-signing settlement from the group of state attorneys general, and California is considering a law against the practice.

As Seal Beach foreclosure defense attorneys, we hope some form of a ban is instated, because dual tracking is underhanded, unfair and deceptive. Homeowners should be able to rely on their lenders to give fair consideration to their requests for a loan modification. When the lender forecloses before the request is considered, they can't get fair consideration because the house is gone. Indeed, it's hard not to wonder if perhaps the goal of dual tracking is to take away the need to consider a loan workout at all -- especially when people like Robinson are asked to submit the same information several times. This often drives up profits for loan servicers, but it is bad for borrowers, neighborhoods and the overall housing market.

If you're tired of getting the runaround and mixed messages from your lender, you should call Howard Law PC. Based in Anaheim, we defend borrowers around California from unfair, hasty or preventable foreclosures. The goal of loan modifications is to keep borrowers in their homes when they can afford to stay, which improves not just their situations but also prevents damage to neighborhoods, lives and the health of the economy. But the financial incentives in place for loan servicers do the opposite -- they incentivize the servicers to draw out the process until the borrower is bankrupt or stealth-foreclosed. Our Torrance foreclosure defense lawyers believe borrowers deserve better, and we help them sue when necessary to get fair treatment.

Howard Law offers free, confidential consultations, so you can speak to us about your case and your legal options at no risk or obligation. To set up a meeting, call us toll-free at 1-800-872-5925 or send us an email today.