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Federal Housing Finance Agency Defends 'Dual Track' Practice in Mortgage Industry

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By : Rudson Tren    99 or more times read
The Federal Housing Finance Agency is set to defend the infamous "dual track" practice within the mortgage servicing sector. Acting director Edward DeMarco was quoted as saying that such "simultaneous actions are necessary."

DeMarco added that the dual track practice is a logical move taken by home loan lenders because of the usually long timeframe involved in any typical foreclosure process. He also emphasized that most borrowers do not show responsiveness when dealing with foreclosure alternatives offered by mortgage providers.

DeMarco's prepared testimony for the scheduled Senate Banking Committee hearing on December 1 was leaked to the press. Observers note that the statement would raise more issues and irk the ire not just of legislators, but also of the public.

Government-sponsored Fannie Mae and Freddie Mac are set to back DeMarco's stand on the issue. Officials from the two secondary mortgage financiers were also summoned in the Senate hearing to testify on the need to immediately resume foreclosures after numerous complainants filed charges against mortgage lenders like JP Morgan, Bank of America, and others. The Federal Housing Finance Agency regulates both Fannie Mae and Freddie Mac.

The so-called "dual track" move is a practice that enables mortgage servicers to proceed to foreclosure even during the negotiation process between the lenders and borrowers. Through the practice, banks do not wait for the outcome of negotiations for possible loan modification schemes offered to help the struggling borrowers repay their debt so that they could keep their homes.
Mortgage banks unanimously deride the negotiation process as more confusing to buyers. Some of them assert that many borrowers do not pay attention and are not responsive enough whenever there are options provided so that foreclosures could be avoided.

Thousands of consumers who suffered foreclosures filed charges against the mortgage lenders. They accuse the banks of mishandling the foreclosure proceedings that resulted to the homeowners' untimely eviction from their own homes. As a result, most home loans banks decided to temporarily stop their foreclosure processes in September to give way for review and re-assessment of their foreclosure documents and practices.

There are now proposals to establish a new Consumer Financial Protection Bureau to put up more oversight on general consumer protection across several industries. The foreclosure anomaly is expected to ignite more interest in the proposal.
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