Crafters of the National Mortgage Settlement clearly wanted banks to pause the foreclosure process while in negotiations with homeowners for a loan modification, but the double-dealing is only “restricted” in the lengthy agreement, leaving workarounds for lenders to continue the practice.
Foreclosure defense attorneys cite dozens of cases where homeowners with pending loan modification applications are also finding themselves moving quickly toward a final judgment and foreclosure sale — a procedure known as dual tracking.
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Loan mod rules
There are different rules depending on when a loan modification is requested and whether the application is considered complete.
For example, if a loan modification is completed within 30 days of the borrower being referred to foreclosure, the bank is not supposed to request a foreclosure judgment or sale — the final stage of the foreclosure process in Florida.
If an application is submitted more than 30 days after the foreclosure referral and a request for a final judgment has already been filed, the bank “shall take all reasonable steps to avoid a ruling on such a motion.”