Attention California Homeowners in Default:  Submit Your Loan Modification Applications Now!

California’s “Anti-Dual-Tracking Ban” will expire on December 31, 2017, so Loan Modifications that are deemed “complete” after date will not be protected by the California Dual-Tracking Ban.

By Stuart R. Simone, Esq.

In 2012, when the California Homeowner’s Bill Of Rights was enacted, much fanfare was made about the “Ban on Lender Dual-Tracking,” codified in Civil Code 2923.6.  And the fanfare was indeed justified.  Once the law became effective on January 1, 2013, it was a primary legal weapon used by foreclosure defense law firms such as Gomez & Simone to stop foreclosure sales, and it forced mortgage lenders to act much more cautiously when trying to force homeowners and their families from their homes via nonjudicial foreclosure.

Here’s how California’s Dual-Tracking Ban worked:  If a homeowner in default submitted a complete loan modification application to their lender (more than 7-14 days before the scheduled foreclosure auction of their home), the lender was required to stop the foreclosure process and review the homeowner’s application; if the application was denied, the homeowner had 30 days to appeal, and even if the appeal was denied, lenders still could not foreclose for another 14 days.  Gomez & Simone and other law firms would go into court to seek a “TRO” (a court-ordered injunction) to stop the foreclosure immediately.  When homeowner’s facing foreclosure came to Gomez & Simone, we would work with the new client to submit a truly “complete” loan modification application and make the law work for them; our success rate has been every high, with most borrowers being granted loan modifications with low monthly payments and interest rates low enough to make them the envy of homeowners everywhere.

Unfortunately, California’s Anti-Dual Tracking Law was passed with a four-year expiration date.  Unless the law was extended by the California Legislature, the Dual-Tracking Ban would expire on January 1, 2018.  Despite the efforts of many homeowner advocates, including Stuart R. Simone of Gomez & Simone, the Legislature apparently did not feel the need, politically at least, to extend the law.  We could not find a single legislator willing to sponsor a bill to extend the law.  Thus, the strongest Anti-Dual-Tracking law in the nation will expire at the end of the year.

WHAT DOES THIS MEAN FOR YOU?   First off, if you are currently in Default – you’ve received an Acceleration Letter from your lender or a Notice Of Default (“NOD”) or Notice Of Trustee Sale (“NOS”) has been recorded – then we strongly advise you to completely fill out and submit a Loan Modification Application as soon as you possibly can.  Do not procrastinate – true, the Ban expires at the end of the year, but your application needs to be deemed “complete” by the 12-31-17 expiration date.  You can bet that your lender will try as hard as they can to say that your application is NOT Complete by asking your for more and more documents – a strategy they have employed the past three years – so there is a good chance you will NOT be protected by the California Dual-Tracking Ban if you wait to submit your loan modification application by December or even mid November.

WHAT DOES THE FUTURE HOLD?  All is not lost.  Gomez & Simone have already researched the FEDERAL Foreclosure Laws and have come up with a legal foreclosure defense strategy using Federal Law.  However, the sad fact is that the Federal laws (enacted from the TILA and RESPA bills, Dodd-Frank) codified in the CFR (mainly “Regulation X” and “Regulation Z”) offer far less protection for delinquent homeowners than the California law.  For example, if you wait to submit your loan modification application until 35 days before the auction date – that’s five weeks – you are out of luck.  Federal law states that less than 37 days before a scheduled sale date, there is NO requirement that servicer review the application or delay or suspend foreclosure activity (though other rules or laws may require review and/or suspension of foreclosure activity).  Also, Lenders are not required to review a loan modification application more than one time per mortgage loan.  That means, if you were already given a loan modification, you are out of luck (unless your lender is feeling nice that day).  Fear not, for there is still another set of Federal Laws for those not covered by these regulations:  Bankruptcy Law.

Bottom Line, the Foreclosure Defense Analysis is changing, but you can count on Gomez & Simone Law to always be on top of these changes to offer you state-of-the-art legal protection.  Our first bit of free advice:  Get those loan modification applications in now!

Gomez & Simone is a full service real estate law firm representing families and business people, homeowners, landlords and tenants, with offices throughout Southern California.  This article is informational only and should not be used as legal advice.  Please note that laws may have changed since this article was published.  Before taking action, we recommend that you consult with one of our attorneys about your specific matter.  Please contact your local Gomez & Simone office or call us at 1-855-219-3333.  Attorney advertising.