Dual Tracking: Foreclosure Modification Ploy
Posted on July 2nd, 2011
Lenders and their servicing companies created a ploy called Dual Tracking which dupes the foreclosure victim into thinking they are on track for a loan modification all the while the bank is still pursuing the foreclosure track. Hence the nameDual Track.
We all know banks are not particularly concerned about their reputation as long as they can continue to make money taking advantage of unsuspecting mortgage clients. They did it when they offered them mortgages for most of the decade with obfuscated terms that if highlighted would have surely quashed the deal. So they didnt highlight themthey instead focused on something else. Like mentioning the subprime borrowers Achilles heel by saying, With credit scores as low as these, this might be your ONLY shot at getting a mortgage or buying a home.
These slight-of-hand tactics worked well when the industry needed to dupe a couple of million folks into signing up for mortgages with exploding terms that would eventually plunge the country into the worst housing and foreclosure crisis in the nations history. So deceit was the root cause of the foreclosure crisis. Systematic deceit involving the way loans were sold especially in the sub-prime market was the trigger for the whole house of cards to come tumbling down.
You are probably sayingRob, we know all of this already.
GreatIm glad. But did you know its happening all over again?
Yepbut this time instead of lying to folks to get them to take out a surprise-filled mortgage, they are lying to them about whether they can save their home via a loan modification.
What am I talking about? I am talking about this dual track process where folks seeking loan modifications from their servicers are convinced they have a real shot at saving their home, only to find out the servicer never actually stopped the foreclosure process.
This is referred to as dual tracking because the servicer is in reality on one tracka track ending in foreclosure, but the borrower believes they are on a different tracka track toward loan modification.
Combine this with the practice of asking the borrower for $1,000s to put them on the loan mod track, this could be seen as especially heartless if, in fact, the bank never intended to do anything but foreclose. If by chance you dont think this is happening right now, check out any of Servicer Reviews, and read the comment section. There is story after heartbreaking story of families who have drained their savings, their 401K and everything else asked of them to comply with the requests to get their loan modified only to find out they were not approved for the modification.
And now to find out the whole exercise is one giant head-fake designed to keep borrowers attention focused on modification, while the banks focused their attention on foreclosing.
I think Im go to be sickThis disgusting dual-track process in deal with foreclosure victims is only the latest in a long line of despicable lender actions over the last decade. I am not really surprised at the depths lenders will sink to gouge borrowers out of their last dime. But this one has its own brand of stink all over it.
Of course, the recent OCC settlement with the big servicing companies reportedly bans the dual track practice. Sadly most inside the industry view the OCC order as a slap on the wrist which servicers will ignore and a preemption of the more punitive settlement the state AGs were mounting before the OCC intervened.
The California legislature attempted to kill this dual tracking servicing tactic with California Senate Bill 729 (SB 729). Lawmakers could not even get the bill out of committee with two tries. If you think the banking lobby has sway in Congress, can you imagine the power they wield in a state legislature? The servicers would say they needed to keep both tracks open or face lawsuits from investors whose interests they are contractually obligated to defend; an argument which may hold some water.
They would also say the last thing the economy needs is more impediments to clearing the foreclosure market a contention which again may have a touch of truth.
But in the end, I must say this one more reason not to trust the banks. If you are facing foreclosure you must assume they are pursuing foreclosure from day one and get competent legal advice on how to save your home. Go ahead and apply for a loan modification, but dont allow that process to distract you from the other legal process moving forward. Take action on both fronts.
If the banks can do itso can you.
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Tags: Dual Tracking, Ploy
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