In a recent article in Mortgage Servicing News here, we learn that apparently 49 state attorneys general were unable to draft the terms of the $25 billion National Mortgage Settlement in a way the Big Banks couldn’t slip through them like the eels they are. It seems that notwithstanding the AGs’ collective belief the banks would stop dual-tracking -that insidious practice of putting someone into a loan mod program while foreclosing them at the same time – it still continues.
It seems that under the terms of the settlement, the Big Banks had agreed to suspend their foreclosure efforts only after they had received “completed” loan mod documents from their borrowers. Apparently, the AGs, forgetting who they were dealing with, believed that the terms of the agreement were sufficient to stop dual-tracking.
However, not so; the process continues. Why? because the settlement paperwork failed to define when a borrower’s application for a loan mod would be deemed “complete.” So the big Banks make that decision for themselves.
From where I sit, this was an grievous oversight. If the Big Banks can find a way to game the system, they will. Like the scorpion in Aesop’s Fable, they can’t help themselves. It’s in their nature.
So, lest you think the lenders and servicers are doing something they agreed not to do, the answer is that they only agreed to stop dual tracking when a borrower’s application was “completed” – based on their own in-house definition.
So the game continues; the borrower applies for the mod; the bank loses the docs; borrower re-submits; bank says they need more; borrower submits more; bank says it’s now all outdated and the borrower must start over. Borrower starts over, resubmits, and the bank says they never got the docs. And since the borrower never knows when enough is enough – because the banks make their own rules – the foreclosure keeps chugging down the track like a runaway train.
Now the state AGs are scrambling to get the banks to agree to something beyond the terms of the signed settlement agreement – i.e. define when a mod application is deemed to be “completed.” Good luck with that.
In the meantime, expect the Big Banks to continue their shenanigans. This is reason #237 why loan mods with banks are a complete myth. [For a more detailed explanation of the myth of loan modification, see my post here. – PCQ]
