Bankruptcy, Loan Modification and National Mortgage Settlement

07 Nov Bankruptcy, Loan Modification and National Mortgage Settlement

Dual tracking - foreclosure and modification

Dual tracking is supposed to cease.

Many people are filing a Chapter 13 Bankruptcy in order to stop a foreclosure even though they are in a middle of a loan modification. It is not uncommon for a debtor to be in the middle of a loan modification feeling secure while relying on the mortgage company when they say “don’t worry we are not going to foreclose.” In reality the loan has been turned over to a foreclosure attorney to take the home through foreclosure. This dual process is called dual trackingandrefers to the practice of the mortgage company running the foreclosure process at the same time of running the loan modification process. As a brief review aforeclosure is the legal process by which the mortgage company will seek to take back your home because you are not making your loan payments. The article here will explain the Missouri foreclosure process.

We were led to believe that the National Mortgage Settlement would help debtors keep their homes by leveling the playing field. Part of that process was to eliminate the dual tracking process to allow debtors the maximum possibility of saving their home from foreclosure through the loan modification process. The National Mortgage Settlement states that the “Big Five” will cease all dual tracking as of October 3, 2012. See page 104 of the consent judgment. This is supposed to mean that while an active loan modification is taking place the mortgage company cannot proceed with the foreclosure. Sounds great, right? Of course who would violate a National Settlement and take a chance of making the Attorney General mad? All great questions but apparently what seems to be clear cut may not be so cut and dry as we were hoping.

What I am seeing at the moment is that the mortgage companies are still claiming that the loan modification paperwork was never complete when received or never received at all. What does this mean? This means that the mortgage company will claim that there is no active loan modification and game over. The mortgage company will then be free to pursue the foreclosure without violating the National Mortgage Settlement. So are you totally out of luck? Not necessarily.

If you are attempting a loan modification, keep a log of your activities. The date you sent the documentation, the list of the documentation sent and the address or fax of where you sent the documentation. Then keep a log of the calls, who you spoke with, the phone number, date and time as well as the conversation details. Then the minute you begin to get the run around or accused of not sending the documentation immediately file a complaint using your logs as evidence. You want to file two complaints. One with the attorney general of your statehere and the other with the monitor of the National Mortgage Settlement, Joe Smith here.

The only way that Chase, Citifinancial, Wells Fargo, Bank of America and Ally/GMAC are ever going to be held accountable is for everyone to report exactly what is taking place. Remember that you cannot blindly trust anyone when it comes to protecting your home from foreclosure. Do not ignore the foreclosure notices no matter how many times the mortgage company representative says do not worry. Arm yourself with knowledge by speaking to a qualifiedbankruptcy attorney to review your rights under bankruptcy protection or a state foreclosure attorney to stop the foreclosure process before it is too late.

Knowledge is power. The more knowledge you have about the National Mortgage Settlement, the loan modification process and a Chapter 13 Bankruptcy, the more power you will have to save your home.


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Former Bankruptcy Attorney to the Kansas City UAW: Ford and GM workers, now assisting the general public in Missouri and Kansas with regaining financial control using the Bankruptcy Code. 816-472-HELP (4357).

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