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Federal Regulators Order Fannie and Freddie to Forbid Dual Track Foreclosures

April 28, 2011

Our San Bernardino County foreclosure defense attorneys agree with consumer advocates that the practice of dual-tracking foreclosures is unfair and potentially predatory to consumers. So we were pleased to see that the Federal Housing Finance Agency has essentially forbidden dual-track foreclosures for a huge proportion of the nation's mortgages -- those owned by Fannie Mae and Freddie Mac. The FHFA ordered the two government-sponsored lenders to make new policies for how servicers handle delinquent mortgages. Among the new policies was a requirement that servicers consider only foreclosure alternatives until the 120th day of delinquency, which effectively puts the kibosh on dual tracking.

The directive from the FHFA, which was created to oversee government-sponsored companies like Fannie and Freddie, was phrased as an order to align their policies. Previously, each company had a different policy for mortgage servicers. But the FHFA also set down specific requirements for the policies on delinquent servicing. In addition to the 120-day rule, Fannie and Freddie will require servicers to formally review cases to ensure that borrowers were considered for an alternative before they may start foreclosure. After foreclosure, they will be required to continue working on alternatives. The order also asked Fannie and Freddie to ensure that mortgage servicers are rewarded and penalized in the same ways at both organizations.

As Costa Mesa foreclosure defense lawyers, we're pleased by this news. News reports from 2008 said Fannie and Freddie owned 31 million U.S. mortgages. Even if only 10 percent of those loans are in default, this rule still has the potential to help millions of Americans. Dual tracking is popular with banks because they believe it saves time, and therefore money, by getting started with the lengthy foreclosure process early. However, the practice leads to foreclosures of people who have already been granted a loan modification or are still under consideration. Frequently, these borrowers have spent months fighting the servicer's seeming indifference or incompetence, which delays a decision on a loan modification long enough for foreclosures to go through.

If this sounds far too familiar and you're tired of fighting your loan servicer for fair consideration, you should talk to Howard Law PC instead. Our Gardena foreclosure defense attorneys represent people throughout California who are ready to take legal action to stop an unfair or preventable foreclosure. Regardless of why borrowers go into default, lenders should give their requests for loan modifications fair consideration, following applicable rules or laws. After practicing in this area throughout the housing crisis, we've come to believe that most banks don't extend fair consideration -- their goal is to extract as many payments and fees as possible before railroading borrowers into foreclosure. We fight back with aggressive negotiations and lawsuits when necessary to save homes and protect our clients' rights.

Howard Law offers free, confidential consultations, so you can learn more about your rights and your legal options. To get in touch or schedule a meeting, call us toll-free at 1-800-872-5925 or send us an email today.