Can my lender foreclose while I am in the process of a loan modification?

by dorothyb on November 15, 2012

If you are in the middle of a loan modification but are also in the middle of a foreclosure you should be aware that the mortgage company could foreclose behind your back.  It is not uncommon for a debtor to be in the middle of a loan modification feeling secure while relying on the mortgage company’s promise that “we will not foreclose while you are in the process of obtaining a loan modification.”

In reality the mortgage company has already turned your loan over to a foreclosure attorney while luring you into believing that they are working on a loan modification. This dual process is called dual tracking and refers to the practice of  the mortgage company running the foreclosure process at the same time of running the loan modification process. If your lender is one of the five companies that is subject to the National Mortgage Settlement, it is required to cease all dual tracking as of October 3, 2012.   The five companies are Chase, Citifinancial, Wells Fargo, Bank of America and Ally/GMAC.

Not to be deterred , the mortgage companies  are able to get around this requirement by claiming that you never completed the loan modification paperwork or that they never received your paperwork at all.  The mortgage company will claim that there is no active loan modification and that they are free to pursue the foreclosure without violating the National Mortgage Settlement.

Fortunately, you live in the State of Washington and are privileged to take part in Washington’s Foreclosure Fairness Program.  The Fairness Program provides mediators and counselors who monitor the loan modification process, including tracking all documents that change hands between you and your lender.

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.   This warning applies to everyone who is attempting to obtain a loan modification from any lender, even those who are not part of the “Big Five.”

For further information, contact the following:

Washington’s foreclosure hotline: 1-877-894-4663

www.commerce.wa.gov/foreclosures

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