Homeowners attempting to defend against a foreclosure are faced with many daunting challenges. Perhaps most frustrating among them is the inability to delay foreclosure proceedings while the homeowner makes a good faith effort to modify their loan.
In many cases, homeowners were saddled with prohibitively expensive loans, the terms of which may not have been made clear at the time of signing; or they were victims of predatory lending. Homeowners willing and able to pay their loan obligations under fair terms are shocked to find out that the banks are under no obligation to delay the foreclosure proceedings during loss mitigation efforts. Often, these attempts to modify can take a long time during which the banks march inexorably toward a sheriff’s sale in a process known as “dual tracking”.
Recently, two consumer advocacy groups have called for national lawmakers to create a Homeowner Bill of Rights in order to prevent unnecessary foreclosures. The policy brief by the groups outlines four rules they believe are necessary to protect homeowners: 1) requiring a duty to engage in loss mitigation analysis before the foreclosure process is commenced; 2) outlawing “dual tracking”; 3) establishing clear procedures regarding loss mitigation and the appeal process if modification applications are denied; and 4) calling on states to add private enforcement that gives homeowners a way to pause foreclosure proceedings while the servicer corrects violations of the law and encourages servicers to consider loss mitigation alternatives.
These seem like reasonable demands considering the cost to the homeowners. In my opinion, it’s a sad state of affairs when an Airline Passenger Bill of Rights sees the light of day before the same for struggling homeowners.
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