I have been reading on so many homeowners whose homes have been mistakenly foreclosured on. Many of the homeowners were either current on their mortgage payments, applied or in process of the loan modification program, or refinanced their homes for a lower interest rate. But, what is not discussed is the dual track system that the banks initate the homeowners to miss mortgage payments to apply and qualify for a loan modification while simultanously processing those homeowners in foreclosure and attaching late fees.
Dual track system was first reported in fall of 2009 by reporter Sarah Buduson in Phoenix, Arizona. Ms. Buduson first reported as "Parallel Foreclosure." Ms. Buduson reported a case in Arizona on how
JP Morgan Chase Bank sold an Arizona couple's home out from under them, even as they were working on a loan modification. Here is the video of the couple's story. Click here. There has been more cases reported by homeowners in the media as well as in lawsuits and courts that banks create a dual track system when one system has the banks initating to homeowners to miss payments while homeowners simply attempt to apply for the government's Home Affordable Modification Program or HAMP so that homeowners can reduce their monthly mortgage payment. And the other system sets in motion of having homeowners resend loss paperwork and documents while the late fees and foreclosure process clock begins to tick against the homeowners. As a result of the dual process system, lenders ahve circumvent legal tools like affidavits that prove that a borrower's payments and documents are in order before taking their property. And one tool that has been used which has been under investigation is the use of robo-signers to sign off on foreclosure affidavits.
In Propublica, former Bank of America enployees told Nevada Attorney General that they were told to mislead homeowners of the status of their applications:
One employee told the Nevada Attorney General’s office, “I felt like I was always lying to borrowers ”
saying they were told to mislead homeowners about the status of their applications. The employee complained to a supervisor, and says of what happened next: “Her instructions in response were just to give the borrowers their status and to tell them that they are ‘in the process,’ in spite of the fact that the computer showed that nothing was happening.”
Other employees bemoaned the poor training Bank of America provided its staff. One said, “The main point of the training is to teach us how to get customers off the phone in less than ten minutes .” Another said, “Nobody at BOA seems to what we actually say to the borrower, as long as we get them off the phone.”
Bank executives have recently admitted in the Congressional and Senate hearing weeks ago that they use a dual track system but didn't say that they would demolish that system. In December 1 opening statement to the Senate Committee by Office of Comptroller of Currency acting head John Walsh, Mr. Walsh addressed the bank's dual track system:In Propublica, former Bank of America enployees told Nevada Attorney General that they were told to mislead homeowners of the status of their applications:
One employee told the Nevada Attorney General’s office, “I felt like I was always lying to borrowers ”
saying they were told to mislead homeowners about the status of their applications. The employee complained to a supervisor, and says of what happened next: “Her instructions in response were just to give the borrowers their status and to tell them that they are ‘in the process,’ in spite of the fact that the computer showed that nothing was happening.”
Other employees bemoaned the poor training Bank of America provided its staff. One said, “The main point of the training is to teach us how to get customers off the phone in less than ten minutes .” Another said, “Nobody at BOA seems to what we actually say to the borrower, as long as we get them off the phone.”
We agree that this dual track is unnecessarily confusing for distressed homeowners, and the OCC is directing national bank servicers to suspend foreclosure proceedings for successfully performing modifications where they have the legal ability and are not already doing so.
Dual track system leaves non-judicial state homeowners with limited recourse. The non-judicial states allow lenders to foreclose on property without having to go through the court system. The only recourse for owners in the non-judicial states is to sue the bank. Federal Housing Finance Agency defends the dual track system while the Attorney Generals in all 50 states that are investigating bank practices want the banks to do away with the dual-track system.
The question should be asked: Who benefits from the dual tracking system? The bank servicers or investors? Well, it is certainly not the investors. In the dual track system, bank servicers benefitted from the collections of late fees, collecting incentives by the government's HAMP program, and collecting attorney fees and other fees from a foreclosure home. What does the investors lose? It is their investment from a foreclosured home. What would investors gain from a loan modification? A continuation of profits for the investors from a home that have been saved. The mortgage servicers got in the foreclosure business and not the loan modification business. Certainly, the entire mortgage servicer business model need an extreme makeover.
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