Home Loan Modification Help: Lenders Call It “Dual Tracking”; Homeowners Call It “Double Crossing”


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When most homeowners trying to prevent foreclosure are going through the loan modification process, they automatically assume that their lender won’t foreclose – unless and until this process comes to some kind of resolution, right?

After all, the homeowner is not dodging the lender. They’re actively engaged in trying to stop foreclosure by seeking a modification in the first place.

But hold on buddy, not so fast. While homeowners are negotiating their little patooties off thinking they’re working their way towards stopping foreclosure, lenders are on another track to start the foreclosure process – engaging in a practice called “dual tracking.”

Stopping Foreclosure via Home Loan Modification Help: What is Dual Tracking

Dual tracking refers to a common bank tactic [that lenders engage in even when homeowners are working their way through the loan modification process. To explain, when a borrower in default (ie, facing foreclosure) seeks a loan modification, the bank/lender often continues to pursue foreclosure at the same time.

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Why Lenders Often Proceed with the Foreclosure Process Even When a Homeowner Is Engaged in the Home Loan Modification Process

It’s quite simple actually – they’re protecting their ah, “assets,” just in case the mod doesn’t go through. To put it in more proper terms, as described in the Los Angeles Times article, Banks are foreclosing while homeowners pursue loan modifications:

Lenders say ‘dual tracking’ protects their investment if the homeowner is unable to qualify for new loan terms. . . . Mortgage servicers can lose money if they don’t foreclose in a timely manner, and repossessions often are complicated and lengthy.

Stopping Foreclosure: The Problem with Dual Tracking for Homeowners

There are a couple of problems with it, namely:

(i) Homeowners are Clueless: Many don’t know that all of this is going on behind the scenes. They think they’re well on their way to stopping foreclosure, when in essence this is far from the truth;

(ii) Limited Options: Many homeowners facing foreclosure are not able to exercise their full options because they’re being left in the dark about what’s really going on.

For example, a homeowner in the above-reference LA Times articles said that equity she had in a home was “stolen” from her because the bank sold her home at auction while she was under application for a home loan modification. She said she would have “sold the home herself” had she known that the bank was auctioning off her property (ie, that the bank was on the dual track process).

She now lives in what was once one of her rental properties.

Most homeowners are not as lucky as this. They have nowhere to go and don’t know what to do when the very roof over their heads are sold out from under them.

Stopping Foreclosure — Home Loan Modification Help: Recently Introduced Legislation to Put a Halt to Dual Tracking

As we discussed recently on this blog in the post, Trying to Stop Foreclosure? 5 Changes Some Mortgage Providers are Now Offering to Help You Keep It, many lenders are overhauling their foreclosure proceedings.

And, some of the very issues raised by dual tracking are attacked head on, namely that lenders will stop foreclosing on homeowners who are in the middle of loan modifications.

Seems like it’d be common sense and not require federal legislation, right? But then again, when does one have the occasion to use the phrases “common sense” and “government legislation” in the same sentence?

Home Loan Modification Help: What to Do If You’re Facing Foreclosure and Seeking a Mod

Outright ASK your lender if they are initiating foreclosure proceedings while you’re actively engaged in seeking a home loan modification. To digress for a minute, there’s an old idiomatic expression in real estate that goes, “If it’s not in writing, it doesn’t exist.”

So, don’t believe what your lender says to you; get everything in writing just in case you find yourself in court, like Mr. Pino did in this Florida foreclosure case, which may be taken up by the state’s supreme court.

Conclusion: Stopping Foreclosure

It seems that every week a new foreclosure law is popping up — from state to state, and federal legislation. If you’re trying to prevent foreclosure, get intimate with laws as they related to this procees for, one overlooked detail can be the difference between stopping foreclosure and losing your home altogether.

Related Posts

How to Stop Home Foreclosure For Over 2 Years Without Making Payments: Do it Yourself for Free — Here’s How

Stopping Foreclosure: What to Do When the Bank Refuses to Accept Your Mortgage Payments & Tries to Escalate the Home Foreclosure Process

Right of Redemption Laws: How to Get Your Home Back – Even After It’s Sold as a Foreclosure

Home Loan Help: Documents Needed to Apply for a Mortgage Modification with HSBC (and Other Lenders)

How to Lose Your Foreclosed Home at Auction and Still Receive Thousands of Dollars

Stop Foreclosure Help: What Happens When You Stop Paying Your Mortgage

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Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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