I am mad as hell as I write this entry. Once again, dual track foreclosure has proven to be alive and well and being practiced by one of the large banks in Silicon Valley.
What is dual track foreclosure? Simply put, it is when the lender agrees to work with homeowners on a loan modification request, but also continues its foreclosure effort simultaneously. If the homeowners are being given the chance to work on a loan modification, why not stop the foreclosure effort until the resolution of the modification request? The problem is that by permitting the homeowners to work on a loan modification, it gives them the false impression that the foreclosure action has halted during the loan modification process. Those homeowners whose loan modifications are rejected are discovering that their homes are being foreclosed soon thereafter, often not giving them enough time to prepare to deal with the loan modification, let alone the foreclosure. In even worse scenarios, the homeowners are being foreclosed on while they are anxiously awaiting answers to the loan modifications. Homeowners are given false hopes of saving their homes through a loan modification, but while they are working through the process, their homes get unceremoniously snatched away without warning.
Legislative efforts were made earlier in the year in California to try to stop this deceptive practice by the lenders, but it never passed. The lobbying efforts of the lending institution were sufficient to get the bill killed in the California Senate. The despicable practice is still not illegal and being widely practiced.
Being the San Jose Short Sale Agent, I received a call from a prospect today who was referred to me by a recent client for whom I completed a successful short sale. He wanted me to help him because he spoke with someone at Wells Fargo who kindly informed him that they denied his loan modification and by the way, they are going to foreclose and sell his home (court house auction) next week. Here is an example of a dual track foreclosure at work.
This homeowner had trouble making his mortgage payments because his wife had lost her job. They went from a two income family for which they qualified their loan to a single income family. They had been working with Wells Fargo since April of this year to get qualified for a loan modification. After months of providing documentation, they were told a few days ago that their loan modification was being rejected. And also, by the way, the foreclosure auction (Notice of Trustee Sale) had been scheduled for next week. When the homeowner asked if he could get a 30 days extension to hire a Realtor to do a short sale, they rejected that request as well.
I would love to help this homeowner, but the problem is, with less than a week to go before the auction date, I cannot stop this trustee sale from taking place. Even if I had a viable offer in hand, most lenders and Wells Fargo, specifically, will not stop the sale if the sale is scheduled to take place in less than 7 days. Had the homeowner called me a week or two ago, I could have worked some magic, but now with less than a week to go before the sale date, he is out of options. Had he not relied solely on the bank to and taken other steps, we could have prepared him for a HAFA short sale and probably gotten him $6,000 to pay off the second lien and another $3,000 in relocation expenses. Instead, he will get nothing for months and months of waiting.
Some of you skeptical readers out there may be wondering if I may be exaggerating how often dual track foreclosures may be occurring in the real world? More often than you would like to believe and sometimes with confusing results.
Family Fights to Keep Home After Accidental Sale – Local News – Sacra Men To, CA – Msnbc
For homeowners out there who are working on loan modifications, do not put all of your hopes into that one basket. The chances of homeowners getting successful permanent loan modifications are small to begin with, most receive a temporary modification or are summarily rejected like the person who called me today. So protect yourself and consider multiple options, do not make the mistake of believing that the lender will have your best interest at heart.