The new California law which prohibits “dual tracking” went into effect January 1, 2013. This law is supposed to prohibit banks from commencing foreclosure proceedings while a loss mitigation option is under review. Loss mitigation options include loan modifications, short sales and deeds-in-lieu of foreclosure.
The law is supposed to prevent any foreclosure activity from moving forward, including the filing of a notice of default. The loophole the banks have found is whether or not the loan is in “active” review. In December and January, the banks “de-activated” many files that had been under review for several months. This way, the banks could still pursue foreclosure without violating the law. So now the trick will be to make sure the file is actually “active” with the bank.
The banks are getting stricter with loss mitigation options every day. If borrowers wait too long, they may be out of luck. Banks now want a complete loss mitigation package to be received at least 14 days prior to the foreclosure. So this means the bank needs to have a complete package in their hands, not just sent out. Files can take 2 days or more for the bank to process, so the sooner the package is sent out, the better. The new law definitely has not been the miracle we all hoped it would be.
Our firm is dedicated to helping clients file bankruptcy, obtain loan modifications, and helping clients get a fresh start. For more information on what First Source Law can do for you, please fill out our free evaluations for bankruptcy and loan modifications.
This post was written by Gina Berg