National Mortgage Settlement Dual -Tracking

National Mortgage Settlement Dual -Tracking | Foreclosure Fraud after applying for a Mortgage Loan Modification

National Mortgage Settlement Monitor Joseph Smith, the watchdog overseeing the multi-state mortgage robo-signing settlement, are weighing further restrictions on so-called dual-tracking, in which banks continue Foreclosures after borrowers apply for Loan Modifications

State and federal regulators are weighing whether to impose additional restrictions on the mortgage practices of five of the nation’s largest banks after numerous complaints of harm to borrowers.

A group of state attorneys general and the U.S. Department of Housing and Urban Development have had advanced discussions with at least two big banks about further restricting so-called dual-tracking, officials said -- the process of simultaneously pursuing home seizures while considering borrowers’ applications for alternatives such as loan modifications.

The discussions are the result of complaints related to provisions in last year’s multi-state mortgage robo-signing settlement between dozens of government agencies and Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial (formerly known as GMAC). The settlement has delivered tens of billions of dollars in mortgage aid to distressed borrowers, and had promised to reform how companies treat homeowners and pursue foreclosures.

While the companies have made broad strides in reforming servicing practices, officials said, much more improvement is needed.

Officials said they are considering changing current policy by agreeing with banks to halt foreclosure proceedings when borrowers first apply for loan modifications and provide basic information. Today, banks halt the process of repossessing a borrower’s property once banks deem the applications complete, a process that can take months. During that time, foreclosure proceedings generally continue.

Talks are fluid and the legal language that would accompany a change is still being sorted out, officials said.

But the change, if implemented, may further reshape how mortgage companies interact with distressed borrowers. For years, officials and borrower advocates have complained that the largest banks frequently string borrowers along for months by repeatedly requesting documents -- often the same batch of records -- before determining that the application is complete and evaluating them for modified loans. During this time, late fees and other charges rack up, ballooning the total amount owed, making a modification more difficult to achieve and pushing troubled borrowers into foreclosure.

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