Throughout the foreclosure crisis, California lenders have been free to employ a practice known as “dual tracking.” This practice has allowed mortgage lenders to forge ahead with foreclosure actions, including property sale, irregardless of whether they were simultanously engaged in loan modification discussions with borrowers. In fact, “dual tracking” is a practice that many mortgage investors have long required lenders to pursue in order to expedite the foreclosure process to the extent possible.
The practice of dual tracking has presented serious problems for borrowers facing the prospect of home foreclosure. Many borrowers have been lulled into an illusory sense of security thinking that they were protected from foreclosure while engaged in good faith loan modification negotiations with lenders, only to be blindsided by a foreclosure sale in the midst of this process.
Additionally, communication channels between lenders and borrowers have frequently become muddled as simultaneous actions were being taken by different lending departments, making it very difficult for a borrower to obtain a clear picture of the status of his or her loan at any given point in time.
To address the serious problems created by dual tracking, California has now made this practice illegal. On October 3, 2012, a negotiated settlement took effect that bars this practice by five of California’s largest mortgage lenders including Bank of America, Citi, JP Morgan Chase, Wells Fargo, and Ally. On January 1, 2013, California’s prohibition of dual tracking, the first such law in the United States, becomes applicable to all mortgage lenders.
Beginning in January, homeowners will have a right to sue lenders who continue to engage in the practice of dual tracking. Under this law known as The Homeowner Bill of Rights, banks found to have violated the law may be forced to pay attorneys’ fees incurred by the borrower. In addition, lenders may be hit with statutory civil damages of up to $50,000 per violation. Perhaps most importantly, borrowers will be able to obtain an injunction halting foreclosure proceedings if able to demonstrate a willful, intentional, or reckless violation of the law.
If you are a California homeowner that has been subject to the practice of dual tracking, you are urged to contact a Forclosure Lawyer at The Pivtorak Law Firm by calling (415) 484-3009, or click here to request a free, confidential consultation online.