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Of All The Brand New Mortgage Rules, This One Is Our Favorite

Mandi Woodruff

Of all the shady practices employed by mortgage lenders, few are as cruel to underwater homeowners as dual tracking.

In a nutshell, it's what happens when one arm of a lender works with a borrower to modify their mortgage, while a completely different arm pushes through paperwork to have them foreclosed simultaneously.

Imagine getting kicked out of your house one day, then getting a letter in the mail congratulating you on your shiny new mortgage rate a month later. 

It's no fun, and finally, the Consumer Financial Protection Bureau is making good on its promise to keep it from happening again.

The agency rolled out a host of new rules Thursday that will change the way lenders deal with borrowers.

Here's our favorite: 

Restricted Dual-Tracking:  Servicers must not make the first notice or filing required for the foreclosure process until a  mortgage loan account is more than 120 days delinquent. This will give borrowers reasonable time  to submit modification applications.  Servicers must not start a foreclosure proceeding if an application is pending for a loan modification  or other alternative to foreclosure.

For borrowers like Minnesota resident Carrie Haskamp, the change is too little too late, but it will undoubtedly make a difference for struggling homeowners down the line.

You can read a full list of the new mortgage servicing rules here.

Here are the Cliff's Notes: 

-When borrowers miss two payments, lenders must inform them of what actions they can take to get back on track.
-Lenders have to make sure borrowers have direct and easy access to the humans handling their paperwork.
-Lenders can't foreclose on homeowners willy nilly. They have to consider all foreclosure alternatives first.
-Lenders have to reply to mortgage modification applications at least 37 days before they plan on selling the home at auction.
-Clear mortgage statements
-Fair warning before lenders mess with interest rates for adjustable-rate mortgages 
-Notify homeowners before they force them to purchase costly property insurance  
-Lenders must credit mortgage payments the same day they're paid
-Lenders must correct any account errors within 30 days, or at least investigate.

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