Facing foreclosure can be overwhelming, especially when you’re actively seeking a loan modification to save your home. Dual tracking occurs when your mortgage servicer advances the foreclosure process at the same time as considering your application for alternatives like a loan modification or forbearance. This practice puts homeowners at risk of losing their homes before their applications are fully reviewed.
How Dual Tracking Used to Work
Dual tracking meant pursuing two conflicting processes simultaneously:
- Foreclosure Process: Legal steps to repossess the home due to missed payments, which may include notices, court actions, and foreclosure auctions.
- Loss Mitigation Process: Efforts by the lender to minimize losses by offering loan modifications, repayment plans, or other options to keep you in your home.
Previously, these tracks often proceeded in parallel, meaning foreclosure could move forward even while a modification application was under review. This led to homeowners losing homes without a fair evaluation.
Federal Protections Against Dual Tracking
In response to abuses, the Consumer Financial Protection Bureau (CFPB) introduced rules under the Real Estate Settlement Procedures Act (Regulation X) to protect borrowers (source: CFPB Mortgage Servicing Rules):
- 120-Day Post-Delinquency Window: Foreclosure actions generally cannot begin until your mortgage is 120 days in arrears, providing time to apply for assistance.
- Foreclosure Pause on Complete Applications: If you submit a complete loss mitigation application more than 37 days before a scheduled foreclosure sale, the lender must suspend foreclosure until they review your application.
- Mandatory Decision Notification: Lenders must inform you of their decision on your application promptly.
- Right to Appeal: If denied, you typically have 14 days to appeal before foreclosure can resume.
How to Protect Yourself
To leverage these protections effectively:
- Act quickly: Missed payments start the clock. Contact your lender immediately.
- Submit a complete application: Incomplete applications do not halt foreclosure.
- Keep thorough records: Document calls, emails, and correspondence.
- Seek free professional advice: HUD-approved housing counselors offer invaluable support.
Clarifying Common Misunderstandings
- Dual tracking is not entirely illegal but is heavily restricted under federal law.
- Simply contacting your lender does not stop foreclosure; a complete loss mitigation application is required.
Understanding dual tracking and your rights can help you navigate foreclosure and protect your home. For more on foreclosure and loan relief options, see our glossary entries on Foreclosure and Mortgage Loan Modification.
Sources:
- Consumer Financial Protection Bureau, Mortgage Servicing Rules: https://www.consumerfinance.gov/rules-policy/regulations/1024/41/
- Nolo, What Is Dual Tracking?: https://www.nolo.com/legal-encyclopedia/what-is-dual-tracking.html
