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Loan Modification and Short Sale Dual Tracking

Many families and individuals who are dealing with an upside down mortgaged home and an unaffordable mortgage payment have sought relief via loan modification. Unfortunately, there are major financial institutions that continue to entertain the possibility of a loan modification while they also simultaneously pursue a foreclosure through a foreclosure sale or auction. It is an extremely confusing and nervous time for some families to see the clock ticking closer towards a foreclosure date while awaiting a response regarding a loan modification. If you are in this situation, you must be prepared to face the foreclosure sale date that has been scheduled on your home. In our experience, many mortgage servicers are unwilling to adjust or postpone the foreclosure sale date to accommodate for a loan modification result especially if you are two weeks or less away from the foreclosure sale date.

What can you do to prepare to get more time for a loan modification or a short sale? A bankruptcy can postpone a foreclosure sale long enough to help you get more time to process the loan modification. An emergency bankruptcy can be filed the day before a foreclosure sale or foreclosure auction is scheduled to postpone the sale to a later date. Bankruptcy protection will stop a foreclosure sale from happening because it is illegal for any debt collection activities to continue while under bankruptcy protection. A foreclosure auction is considered a debt collection activity. Whether you need more time for a loan modification to be processed, a short sale application to be processed, or even if you need more time for a short sale to close, a bankruptcy can postpone a foreclosure auction to allow more time. There are rules against dual tracking (having a mortgage company process both a loan mod and a foreclosure sale), but you may not have the resources or the proof to take your lender to court for the dual tracking error. Bankruptcy may be your best option.

To learn more about managing your foreclosure with bankruptcy, contact us for a consultation by phone or in-person with our Riverside bankruptcy attorneys or our Orange County bankruptcy attorneys at (855) 257-7671.

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