For years, mortgage banks have been guilty of "dual tracking," where they offer help to a distressed homeowner at the same time they pursue foreclosure. It is one of the most frustrating and exasperating, and common, actions banks take when homeowners are unable to keep up with their mortgage payments.

When the robo-signing scandal became public and the attorneys general of California and all 49 other states began settlement talks with the major mortgage banks over what the consequences should be for the lenders, "dual tracking" came up as a practice that simply had to end. For a homeowner to be offered a refinanced mortgage, to be allowed to pursue a short sale or given some other form of potential help, and then to be foreclosed on anyway, has been a practice that has been uniquely abhorrent. Unfortunately, the negotiations with the attorneys general have not produced a deal, and dual tracking seems to be alive and well. 

In a recent news story, a family (outside of California) had moved out of their house after the parents lost their jobs. The family continued to take care of the house and looked for potential buyers. With the lender's permission, the family pursued a short sale, and found at least one potential buyer.

Then the bank changed the locks on the house, making it impossible to show to potential purchasers. The family would receive multiple letters from the bank, often on the same day, offering help in one letter and threats of foreclosure in another.

Despite communication from the family that the house was being maintained and that potential buyers were interested, the bank moved to "protect their property."

Dual tracking is still a reality, but hopefully one that can be eradicated. Until then, distressed homeowners should seek professional assistance with debt negotiation and foreclosure matters.

Source: Star Tribune "Whistleblower: Locked out by lender" Nov. 19. 2011