The foreclosure system is clogged, both in Florida and across country. There have already been huge numbers of foreclosures, and there are so many in the pipeline, that the pace has slowed in recent weeks.
There are many factors involved here, however, besides the volume. In the 23 states, including Florida, where courts play a role in foreclosure, concerns about the integrity of the paperwork required for proper foreclosure have contributed to the slowdown. So has homeowners' desire to hang onto their houses and lenders' reluctance to take those houses back.
For homeowners, the response to foreclosure is often emotional, because the house where you live can be a very personal thing. For banks and other lenders, however, the response to foreclosure proceedings is typically very businesslike. Lenders tend to be reluctant to take houses back because that would mean reporting losses on their loan ledgers.
The "Dual Tracking" Double Cross
Reluctance by banks to write down bad loans is one thing. But the banks' behavior in proceeding with foreclosure despite good-faith loan modification efforts by homeowners is quite another. A far-too-common scenario plays out like this:
A homeowner who is suffering from job loss or other financial problems seeks to avoid foreclosure by making reduced mortgage payments. The bank accepts those modified payments for awhile, but it does not actually stop the foreclosure proceedings. Then, when the trial modification period is over, the bank moves in to foreclose - even if the homeowner did everything he or she was supposed to in meeting the terms of the modified loan.
The banking term for this practice is "dual tracking." To the betrayed homeowner, who faithfully made the modified payments, it can seem like - as the Los Angeles Times put it - a double-cross.
How an Attorney Can Help
If you are facing foreclosure, you need to consider all of your debt relief options carefully. This includes bankruptcy as an option that may make sense for you as a way to keep your home. Bankruptcy does have consequences for your credit score, but that may be preferable to losing your house.
If you do decide to explore mortgage modification, make sure your lender isn't just stringing you along by accepting reduced payments for awhile before foreclosing.
Finally, if there is financial assistance from a government program available to fight foreclosure, ask your attorney whether that might work for you. It is no secret that the original federal HAMP program provided scant help to homeowners. But a better program could conceivably arise in its place, as the massive foreclosure crisis continues to unfold.
If you have fallen behind on your house payments, you are not alone. Even if you are underwater on your mortgage, you have options.