The practice known as ‘dual tracking’ — when a lender moves ahead with foreclosure as it negotiates a loan modification with the same homeowner – persists among the big banks under the National Mortgage Settlement.
How is this possible when dual tracking is one of the abuses supposedly addressed by new mortgage servicing standards?
The Palm Beach Post reports that loopholes found in the complicated rules pertaining to dual tracking amount to mere restrictions — not an outright prohibition of the double-dealing practice.
Dual-tracking rules are mentioned in more than four pages of mortgage settlement documents, covering time tables for putting foreclosures on hold, appeals processes, trial payment periods and expedited review requirements.
The Post reports that there are different rules depending on when the modification is requested and whether the application is considered finalized.
“The banks know they can find loopholes in this type of detailed language,” West Palm Beach foreclosure defense attorney Paul Krasker told the Post. “I assume the banks would not commit to a simple ‘no dual-tracking’ provision and insisted on carving out exceptions.”
Lenders are ruling applications incomplete for minor reasons, such as checking the wrong box on a tax return transcript request, Krasker said. An incomplete mortgage modification application is one of the loopholes for proceeding with foreclosures.
“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.
Recently, Florida Attorney General Pam Bondi strongly criticized Bank of America and Wells Fargo for possible violations of the 2012 settlement. Those concerns include dual tracking.
The five banks party to the settlement are Bank of America, Citi, JPMorgan Chase, Wells Fargo and Ally/GMAC.