California Homeowners in Default Now Able to Submit Loan Modification Applications

LOS ANGELES, Oct. 11, 2017 /PRNewswire/ -- In 2012, when the California Homeowner's Bill Of Rights was enacted, much fanfare was made about the "Ban on Lender Dual-Tracking," codified in Civil Code 2923.6. And the fanfare was indeed justified. According to Attorney Stuart R. Simone, once the law became effective on Jan. 1, 2013, it was a primary legal weapon used by foreclosure defense law firms such as Gomez & Simone to stop foreclosure sales, and it forced mortgage lenders to act much more cautiously when trying to force homeowners and their families from their homes via nonjudicial foreclosure.  

Here's how California's Dual-Tracking Ban worked: If a homeowner in default submitted a complete loan modification application to their lender (more than 7-14 days before the scheduled foreclosure auction of their home), the lender was required to stop the foreclosure process and review the homeowner's application; if the application was denied, the homeowner had 30 days to appeal, and even if the appeal was denied, lenders still could not foreclose for another 14 days. Los Angeles Real Estate Attorneys Gomez & Simone and other law firms would go into court to seek a "TRO" (a court-ordered injunction) to stop the foreclosure immediately. When homeowner's facing foreclosure came to Gomez & Simone to would work with the clients to submit a "complete" loan modification application and make the law work for them. The track record of success has been very high, with most borrowers being granted loan modifications with low monthly payments and interest rates as low as the majority of most other homeowners.

Unfortunately, California's Anti-Dual Tracking Law was passed with a four-year expiration date.  Unless the law was extended by the California Legislature, the Dual-Tracking Ban would expire on Jan 1, 2018. Despite the efforts of many homeowner advocates, including Stuart R. Simone of Gomez & Simone, the Legislature apparently did not feel the need, politically at least, to extend the law. So far there has not been a single legislator willing to sponsor a bill to extend the law.  Thus, the strongest Anti-Dual-Tracking law in the nation will expire at the end of the year.

For those currently in default who have received an Acceleration Letter from a lender or a Notice Of Default ("NOD") or Notice Of Trustee Sale ("NOS") has been recorded –  it is strongly advised to completely fill out and submit a Loan Modification Application as soon as possible. True, the Ban expires at the end of the year, but applications need to be deemed "complete" by the 12-31-17 expiration date. Lenders will often try as hard as they can to say that applications are NOT Complete by asking for more and more documents – a strategy they have employed the past three years – so there is a good chance homeowners may NOT be protected by the California Dual-Tracking Ban if a homeowner waits to submit the loan modification application by December or even mid November.

Gomez & Simone have already researched the FEDERAL Foreclosure Laws and have come up with a legal foreclosure defense strategy using Federal Law. However, the sad fact is that the Federal laws (enacted from the TILA and RESPA bills, Dodd-Frank) codified in the CFR (mainly "Regulation X" and "Regulation Z") offer far less protection for delinquent homeowners than the California law.  For example, those who wait to submit loan modification application up to 35 days before the auction date – that's five weeks – are out of luck. Federal law states that less than 37 days before a scheduled sale date, there is NO requirement that servicer review the application or delay or suspend foreclosure activity (though other rules or laws may require review and/or suspension of foreclosure activity). Also, Lenders are not required to review a loan modification application more than one time per mortgage loan. That means those who were already given a loan modification are out of luck. However, there is still another set of Federal Laws for those not covered by these regulations: Bankruptcy Law.  

Bottom Line, the Foreclosure Defense Analysis is changing, but Gomez & Simone Law strongly advises distressed homeowners to get those loan modification applications in now.

Gomez & Simone is a full-service real estate law firm representing families and business people, homeowners, landlords and tenants, with offices throughout Southern California.  This article is informational only and should not be used as legal advice. Please note that laws may have changed since this article was published. Before taking action, it is recommended to consult with attorneys about specific matters. For more information, or to make a press inquiry, contact Gomez & Simone's office or call (855) 219-3333.  

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