Banksters Continue Dual-Tracking Home Loan Borrowers Into Foreclosure, Relying On Subtle Loopholes In 49-State Settlement Agreement To Keep Screwing Homeowners
In West Palm Beach, Florida, The Palm Beach Post reports:
- Crafters of the National Mortgage Settlement clearly wanted banks to pause the foreclosure process while in negotiations with homeowners for a loan modification, but the double-dealing is only “restricted” in the lengthy agreement, leaving workarounds for lenders to continue the practice.
Foreclosure defense attorneys cite dozens of cases where homeowners with pending loan modification applications are also finding themselves moving quickly toward a final judgment and foreclosure sale — a procedure known as dual tracking.
West Palm Beach foreclosure defense attorney Paul Krasker said he has 143 clients who are being dual-tracked. He said lenders are outright violating the dual-tracking restrictions, but are also using the complicated rules to legally continue with a foreclosure during the modification process.
“The banks know they can find loopholes in this type of detailed language,” Krasker said. “I assume the banks would not commit to a simple ‘no dual-tracking’ provision and insisted on carving out exceptions.”
The dual-track rules, which are outlined in more than four pages in settlement documents, include time lines for when foreclosures will be put on hold, appeals processes, trial payment periods and expedited review requirements.
There are different rules depending on when the modification is requested and whether the application is considered complete.
Krasker said some bank attorneys interpret the rules to mean they can get a final judgment against a homeowner but not go to sale. In Florida, sale dates are set when a judgment is entered, and with the courts under pressure to move cases, it may not be so simple to get a sale changed.
Also, lenders are ruling applications incomplete for minor reasons, such as checking the wrong box on a tax return transcript request, Krasker said.
“The banks are relying on borrowers to not be able to complete the applications and then the banks notify the borrowers to resubmit after the time deadline passes,” he said. “The worst part is you get banks who come back and say you’re too close to a sale date so we won’t issue a modification.”
Florida Attorney General Pam Bondi scolded Bank of America and Wells Fargo for possible violations of the 2012 settlement this month, including concerns about dual tracking.
In a May letter to Wells Fargo that preceded a meeting with the National Mortgage Settlement monitoring committee, Bondi’s office said homeowners are complaining they are wrongfully referred to foreclosure during the modification process and then charged for attorneys costs and other default-related fees. According to the settlement, a homeowner who is late on payments by 10 months or less, but submits a loan modification application, should not be referred to foreclosure.
Still, the attorney general’s office acknowledges dual tracking is permitted in some circumstances.
“While there are stringent restrictions on dual tracking in the settlement, the settlement does not prohibit it entirely as there are instances when it is appropriate or mandated by the terms of the mortgage and the entity that controls the loan,” wrote Assistant Attorney General Michael Moore in a June 7 letter to Krasker.