Under federal law (12 CFR 1024.41), your mortgage lender cannot foreclose on your New Jersey home while actively reviewing a complete loss mitigation application submitted more than 37 days before a scheduled foreclosure sale. This prohibition on “dual tracking” is one of the most important protections available to NJ homeowners facing foreclosure, and violations can result in dismissal of the foreclosure action, monetary damages, and attorney fee awards.
What Is Dual Tracking?
Dual tracking is the practice of a mortgage servicer pursuing two conflicting paths at the same time: reviewing a borrower’s application for a loan modification or other loss mitigation while also advancing the foreclosure process. Before federal regulations addressed this issue, it was common for homeowners to receive foreclosure sale notices even while their modification applications were under active review.
Federal RESPA Protections Under 12 CFR 1024.41
The Consumer Financial Protection Bureau’s Regulation X (12 CFR 1024.41) establishes specific prohibitions against dual tracking. If a borrower submits a complete loss mitigation application more than 37 days before a scheduled foreclosure sale, the servicer is prohibited from moving for foreclosure judgment or order of sale, or conducting a foreclosure sale, while the application is pending. These protections apply to the initial application review, any appeal of a denial, and the period during which the borrower is considering an offer of a loss mitigation option. The servicer also cannot make the first notice or filing required for foreclosure until a complete application has been evaluated and all appeals exhausted.
How NJ Courts Enforce Dual Tracking Protections
In New Jersey, dual tracking protections are enforced through the foreclosure court system. NJ Court Rule 4:64-1 governs residential foreclosure proceedings and provides mechanisms for borrowers to raise dual tracking violations. If a borrower can demonstrate that their servicer advanced the foreclosure while a complete loss mitigation application was pending, the court may stay the foreclosure proceedings, require the servicer to complete the loss mitigation review, and impose sanctions for the violation.
What Constitutes a “Complete” Application
A critical issue in dual tracking disputes is whether the borrower’s loss mitigation application was “complete.” Under 12 CFR 1024.41(b)(1), a complete application means the borrower has submitted all the information the servicer requires from the borrower. The servicer must exercise reasonable diligence in obtaining documents and information from third parties. Servicers are required to notify borrowers within 5 business days of receiving an application whether it is complete or what additional information is needed.
How to Challenge Dual Tracking in New Jersey
If you believe your mortgage servicer has engaged in dual tracking, several remedies are available. You or your attorney can file a motion in the NJ foreclosure court to stay proceedings based on the pending loss mitigation review. You can file a complaint with the CFPB documenting the dual tracking violation. You can raise dual tracking as an affirmative defense in your foreclosure Answer. In some cases, you may also have a private right of action for damages under RESPA, including actual damages, statutory damages of up to $2,000 per violation, and attorney fees.
Penalties for Servicer Dual Tracking Violations
Servicers who violate the dual tracking prohibition face significant consequences. Under 12 U.S.C. § 2605(f), borrowers may recover actual damages suffered as a result of the violation, additional statutory damages of up to $2,000, and reasonable attorney fees and costs. In class actions, additional statutory damages may apply. NJ courts may also dismiss the foreclosure action, vacate a foreclosure judgment obtained through dual tracking, or order the servicer to complete a good-faith loss mitigation review.
Call Friscia & Associates Today
If your lender is pursuing foreclosure while your loan modification application is under review, your rights may be being violated. Call Friscia & Associates at (973) 500-8024 to speak with a NJ foreclosure defense attorney who can evaluate whether dual tracking has occurred and take immediate action to protect your home.
Legal Disclaimer: The information on this page is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by reading this content. Every foreclosure case is different, and outcomes depend on the specific facts and circumstances involved. If you need legal advice, please contact our office to schedule a consultation.