Our homeowner clients have every conceivable type of complication, predicament and dilemma and face an obstacle of issues when they contact and consult with me. One lender practice I see often is the “Dual Track” foreclosure process.
Last month, the homeowners in California received a bit of good luck when their governor signed a Homeowner’s Bill of Rights curtailing some of the worst lender foreclosure practices including “Dual Track” foreclosure.
Oregon followed the same route with their SB1552 that took effect last month too. Oregon significantly altered the mortgage foreclosure process and also ended the “Dual Track” practice.
In a “Dual Track” foreclosure practice, the lender (or servicer) offers and agrees to work with the homeowner on a loan modification request or forbearance agreement while simultaneously working to foreclose on the same homeowner.
Homeowners get a false sense of security and the impression the lender is working to help them get a home modification loan. Many homeowners believe while they’re in the process or the trial period of the home modification loan, the foreclosure process has been stopped. Once the home modification loan is denied, they’re surprise at how fast the foreclosure happens. They don’t have enough time to prepare or to seek help. Most homeowners are still in shock with the modification denial. Most were led to believe they’d be approved as soon as their trial payments were made.
The harsh reality is when the homeowner is in a regular foreclosure process, they normally don’t make any payments. When on a “Dual Track”, each payment received by the lender during a loan modification or forbearance agreement is basically free money to the servicer who wouldn’t see any money (payments) during that process. The “Dual Track” enables the lender to immediately foreclose and put the home up for auction. The home can be foreclosed on without any additional notices.
The sad truth is the success rate for HAMP is dismal. Depending which government statistic you want to use, the HAMP success rate is only between 3.5 and 12%. The average denial rate is somewhere around 94%.
At present, California has 500,000 homes somewhere in the foreclosure process. One of the major provisions of the new legislature is to ban “Dual Tracking”. The mortgage lender or servicer now has to make a decision on a home modification application before advancing the foreclosure process by filing a notice of default or notice of sale, or by conducting a trustee’s sale. Essentially, the bill puts the foreclosure process on hold for the duration of the lender’s review of the home modification loan.
To have more transparency and to treat homeowners more fairly is a common sense reform that’s needed in Colorado. The deceptive practices and conduct regarding loan modifications and foreclosures has to change. We need to amend a system where the homeowner has a fair opportunity to be the responsible homeowner most want to be.
Our country is going through a terrible economic crisis where more than 30 million people are unemployed or underemployed. Unemployment is listed as the number one reason for foreclosures. Colorado’s projected rate of foreclosure from 2009 until the end of this year is more than 140,000 homes (Colorado Trustees reported 8,540 foreclosure filings the fourth quarter of 2011). Almost all homeowners try a forbearance or home modification loan first.
Throwing people out of their homes when they’re trying, in good faith, to refinance and modify their home loans is just plain irresponsible and inappropriate.
Keith A. Gantenbein, Jr. is a foreclosure defense attorney located in Denver and servicing all of Colorado. He also handles bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant. If you think you will be facing foreclosure, or are in the foreclosure process, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.