What Is Dual Tracking?

Dual tracking occurs when a residential mortgage loan servicer is reviewing the first complete application from a homeowner for a modification or other loss mitigation option, and the servicer files a foreclosure complaint, applies for a final judgment in the foreclosure or schedules a sheriff sale. Lenders are legally required to: not file a foreclosure complaint; not apply for a final judgment in the foreclosure; and not schedule a sheriff sale, if they have received the first modification application or other loss mitigation application from a residential mortgage borrower. This is based upon the Real Estate Settlement Procedures Act (RESPA).

A residential mortgage servicer may file a foreclosure complaint, apply for Final Judgment and schedule a sheriff sale if they have reviewed a prior application or if the application is not complete.

Dual tracking may also occur when a lender proceeds with foreclosure while a Borrower is making timely loan modification payments.

In addition to the federal protection of RESPA, New Jersey homeowners have additional protections, including, but not limited to, the New Jersey Fair Foreclosure Act, The NJ Consumer Fraud Act and the Fair Debt Collections Practices Act..

Is Dual Tracking Illegal in NJ?

Dual tracking is illegal under the CFPB’s (Consumer Financial Protection Bureau) mortgage servicing rules. Under these requirements, the foreclosure process needs to halted while the lender actively reviews your first complete application for a loan modification or other loss mitigation option.

Your lender is violating federal law if you have submitted your first complete application and:

Your lender fails to review and respond to your loan modification application within 30 days after you submitted it at least 37 days before a sheriff sale.
Your lender files a foreclosure complaint, applies for a final judgement, or schedules a sheriff sale.

In these situations, the foreclosure process can only resume once it’s communicated to you that your application was denied, you don’t qualify, or you default on the modified payment plan.

Fighting Back Against Dual Tracking in NJ

If a servicer violates these rules, you may have legal grounds to halt the foreclosure, delay the Sheriff Sale, or seek damages and attorney’s fees.

Homeowners in New Jersey who are facing dual tracking should contact a NJ foreclosure defense attorney who can help you with the proper applications to the Court. You are not alone in the fight against foreclosure and lender violations.

If you believe you have been the victim of dual tracking, or other misconduct, by your lender, the Law Office of Ira J. Metrick, Esq. is ready to stand by your side and fight for your rights.

Dual Tracking Statute (12 C.F.R. §1024.41(c))

(1) Complete loss mitigation application. If a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, then, within 30 days of receiving a borrower’s complete loss mitigation application, a servicer shall:

(i) Evaluate the borrower for all loss mitigation options available to the borrower; and

(ii) Provide the borrower with a notice in writing stating the servicer’s determination of which loss mitigation options, if any, it will offer to the borrower on behalf of the owner or assignee of the mortgage. The servicer shall include in this notice the amount of time the borrower has to accept or reject an offer of a loss mitigation program as provided for in paragraph (e) of this section, if applicable, and a notification, if applicable, that the borrower has the right to appeal the denial of any loan modification option as well as the amount of time the borrower has to file such an appeal and any requirements for making an appeal, as provided for in paragraph (h) of this section.

(2) Incomplete loss mitigation application evaluation –

(i) In general. Except as set forth in paragraphs (c)(2)(ii) and (iii) of this section, a servicer shall not evade the requirement to evaluate a complete loss mitigation application for all loss mitigation options available to the borrower by offering a loss mitigation option based upon an evaluation of any information provided by a borrower in connection with an incomplete loss mitigation application.

(ii) Reasonable time. Notwithstanding paragraph (c)(2)(i) of this section, if a servicer has exercised reasonable diligence in obtaining documents and information to complete a loss mitigation application, but a loss mitigation application remains incomplete for a significant period of time under the circumstances without further progress by a borrower to make the loss mitigation application complete, a servicer may, in its discretion, evaluate an incomplete loss mitigation application and offer a borrower a loss mitigation option. Any such evaluation and offer is not subject to the requirements of this section and shall not constitute an evaluation of a single complete loss mitigation application for purposes of paragraph (i) of this section.

(iii) Payment forbearance. Notwithstanding paragraph (c)(2)(i) of this section, a servicer may offer a short-term payment forbearance program to a borrower based upon an evaluation of an incomplete loss mitigation application. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, and shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of a payment forbearance program offered pursuant to this section.

(iv) Facially complete application. If a borrower submits all the missing documents and information as stated in the notice required pursuant to § 1026.41(b)(2)(i)(B), or no additional information is requested in such notice, the application shall be considered facially complete. If the servicer later discovers additional information or corrections to a previously submitted document are required to complete the application, the servicer must promptly request the missing information or corrected documents and treat the application as complete for the purposes of paragraphs (f)(2) and (g) of this section until the borrower is given a reasonable opportunity to complete the application. If the borrower completes the application within this period, the application shall be considered complete as of the date it was facially complete, for the purposes of paragraphs (d), (e), (f)(2), (g), and (h) of this section, and as of the date the application was actually complete for the purposes of paragraph (c). A servicer that complies with this paragraph will be deemed to have fulfilled its obligation to provide an accurate notice under paragraph (b)(2)(i)(B).

Statue Explained

As long as you submit a complete loan modification application at least 37 days before a sheriff sale, your lender must review and respond to the application within 30 days. If they take longer than 30 days to review and respond, it is a violation of federal law.
If you have obtained a loan modification, or are being reviewed for a modification, your lender cannot file a foreclosure complaint, apply for a final judgement of foreclosure, or schedule a sheriff sale. This is known as Dual Tracking, and is a violation of federal law.

If your lender has taken any of these actions, or is telling you that your application is incomplete, we can help defend your rights. As these violations can result in an unlawful sheriff sale, this is a time sensitive issue. It is crucial to seek aggressive, experienced legal counsel who can determine whether a violation has taken place and what your options are for correcting it. Contact us today to discuss your case.