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
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.