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California Monitor: Dual Tracking Complaints Increased After Settlement

All five of the nation's biggest mortgage lenders said they complied or worked with the Office of Settlement Management Oversight to conform to more than ""300 new servicing standards"":https://themreport.com/articles/deadline-for-adopting-national-settlements-new-servicing-standards-arrives-2012-10-03, but one state monitor reports that servicers took their time on some issues.

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In her first ""monthly report"":http://californiamonitor.org/wp-content/uploads/2012/10/Report-Final-4p.pdf as California Monitor, ""Katherine Porter"":http://californiamonitor.org/ described the servicers' efforts to reform their practices before the October 2 deadline outlined in the national mortgage settlement. Porter's first evaluation examined the practice of dual tracking.

Described by Porter as a ""race between foreclosure and loan modification,"" dual tracking is a practice used by some mortgage companies to negotiate a loan modification for a distressed homeowner while initiating foreclosure sale proceedings at the same time.

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The national mortgage settlement has provisions to restrict dual tracking, and a separate law in the recently passed California Homeowner Bill of Rights provides protections for California mortgages serviced by the banks involved in the settlement.

The companies in the settlement were given 180 days to reform their dual tracking procedures, a period during which complaints about dual tracking actually increased, Porter revealed. At their height in August, complaints about dual tracking made up 25 percent of the total complaints heard by Porter's office.

Dual tracking complaints saw a sharp decline through September as the final deadline approached, a trend Porter sees as a sign of cooperation with the settlement's restrictions. While servicers did work with the monitor's office to ensure fair attention was given to loan modifications since the settlement, Porter said it may be a cold comfort to homeowners who faced dual tracking while waiting out the deadline.

""While some changes, such as implementation of a single point of contact for borrower communication, occurred quickly, the banks have taken the full 180 days (six months) to stop dual tracking,"" Porter said. ""This is permissible under the settlement. But this waiting has been painful for homeowners, whose fate is uncertain under the dual track regime.""

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