National Mortgage Settlement Update -- Tightening Up Dual-Tracking
According to this article, the initial compliance reports from the National Mortgage Settlement are causing regulators to consider tightening up the restrictions on dual-tracking. Under the current terms of the National Mortgage Settlement, banks must stop moving a foreclosure forward when a homeowner has fully submitted his or her loan modification package. The change being considered would put a freeze on foreclosures when borrowers first apply for the loan modification by providing basic information.
This change would be good news for most borrowers. Although the foreclosure timeline in Illinois is longer than in other states, many borrowers would be put at ease if dual-tracking stopped earlier. Given the recent revelations about Bank of America's loan modification practices, I'd say that waiting for a "complete" loan file could be a futile effort with some banks. Forcing them to stop the foreclosur when the application is first made makes sense -- it removes a stressor from the homeowner and forces the bank to focus on actually processing and addressing the application.
It also appears that Joseph Smith, the head of the Office of Mortgage Settlement Oversight, is also implementing four new compliance tests for banks. One would address how banks handle modification applications. Another would address whether banks are properly using the "single point of contact" required by the settlement. More details on the new metrics should be announced in a month.