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Dual tracking occurs when a mortgage holder continues to foreclose on a homeowner’s home while simultaneously considering the homeowner’s application for a loan modification. In the past, dual tracking was common. However, new rules issued by the Consumer Financial Protection Bureau (CFPB) as well as various state laws and the National Mortgage Settlement (NMS) offer protection to homeowners in this situation.

The CFPB rules will become effective January 10, 2014 and will strictly limit the ability of mortgage servicers to foreclose on a borrower while also negotiating a loan modification. Some states have already enacted similar restrictions and the NMS has limits as well, although it only covers certain lenders.

Read on to learn more about recent and upcoming laws that restrict dual tracking.

Dual Tracking and Foreclosures

During the mortgage crisis, it was typical for mortgage holders to advance a foreclosure while telling the homeowner he or she was in the running for a loan modification. In most cases, the homeowner would end up with whichever one was completed first, usually a foreclosure. Because of this practice, called dual-tracking, many homeowners who were sure that a loan modification was forthcoming were shocked to ultimately lose their homes to foreclosure.

Laws That Restrict Dual Tracking

In response to this issue, the Consumer Financial Protection Bureau has issued a rule and certain states have passed laws in recent years to restrict mortgage holders from continuing the foreclosure process if the homeowner is working on securing a loan modification. Under these laws, when you submit a complete application for a loan modification, the foreclosure process must be halted until the application has been fully reviewed.

Read more here

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