Lewis & Monroe, PLLC
Free One-Hour In-Office ConsultationsFree One-Hour In-Office Consultations

Modification process and foreclosure can happen at the same time

A loan modification can greatly help a homeowner who is on the verge of foreclosure. With the modification, monthly mortgage amounts are decreased, and for some it's enough for them to be able to afford living in their home.

However, while a mortgage modification can be a great tool for a struggling homeowner, due to certain bank practices, obtaining one in a timely enough manner to avoid foreclosure can be somewhat tricky, and now some consumer advocates and the state attorneys general are pushing for regulations on bank practices that would ban what is commonly called "dual tracking."

"Dual tracking" is when a homeowner is going through the process of obtaining a loan modification at the same time that the bank is proceeding with a foreclosure. What this means is that many people will end up being foreclosed on, even though they believe that they are on the right path to obtaining a modification and payments they can afford.

To try and combat this confusion and misconception among homeowners the state attorneys general have proposed some new terms to banks as part of a foreclosure-system overhaul. Of those proposals, one would be that a bank could no longer start the foreclosure process once a homeowner has submitted an application for a mortgage modification.

As of now a similar ban is already in place, but only applies to those homeowners who go through the federal foreclosure relief program known as Home Affordable Modification Program. And while this is good news for those who try and obtain a modification through HAMP, it does not help homeowners who end up receiving a modification through a bank's in-house program.

When just looking at the numbers for 2010, 1.24 million received modification through an in-house program, while only 513,000 obtained a modification through HAMP, which means that the majority of homeowners who are struggling turn to in-house bank programs for help.

As of now the dual tracking provision has not been accepted, and is included within a 27-page term sheet that was issued by the state attorneys general to the banks. At this point the banks have responded with their own proposals, and the negotiations are still ongoing.

Source: Los Angeles Times, "Banks are foreclosing while homeowners pursue loan modifications," Alejandro Lazo, 14 April 2011

No Comments

Leave a comment
Comment Information
ABA Defending Liberty Pursuing Justice American Bankruptcy Institute The Florida Bar 1950 CFAWL Criminal Florida Association For Women Lawyers Orange County Bar Association
Email Us For a Response

Contact The Firm In Orlando, Florida

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Lewis & Monroe, PLLC

651 Rugby Street
Orlando, FL 32804

Phone: 407-917-4147
Fax: 407-246-0008
Map & Directions