Written by attorney Kenneth Thomas Calegari

California Residential Foreclosure Law "Dual Tracking"


As if consumers are not suffering sufficiently in the ongoing economic crisis, even while pursuing solutions to their housing difficulties, and sometimes continuing to make mortgage payments, they find their homes have been sold from under them in a foreclosure sale. As identified in an April 14, 2011 Los Angeles Times article by Alejandro Lazo, this is the result of a common bank tactic referred to as ‘dual tracking’ where, while a borrower in default is seeking a loan modification, the lending institution often continues to simultaneously pursue foreclosure.

The article goes on to state that while lenders contend that dual tracking simply protects their investment if the homeowner is unable to qualify for new loan terms, regulators and consumer advocates say the practice lulls some homeowners into thinking they are no longer at risk of having their homes taken away. Paul Alvarez, in a special to The Press-Enterprise, notes that consumer advocates say hundreds, if not thousands, of borrowers are losing their homes in foreclosure while negotiating to lower their mortgage payments.

To combat this regulators and consumer advocates are aiming to curtail the practice as part of an overhaul of the foreclosure system. However, they are meeting resistance from the mortgage industry including Fannie Mae and Freddie Mac. As stated by Bank of America President Barbara Desoer when testifying before Congress, “parallel foreclosure and modification processes are required by many investors and reflect an industry-wide servicing practice." While acknowledging the ‘dual track’ process is a source of confusion for customers she offered no specific suggestions to clarify the situation.

The foreclosure process in California is statutorily controlled by the California Civil Code. Lenders in the state have the option of employing a judicial or non-judicial foreclosure process, usually opting for the more direct non-judicial route as detailed by the “Foreclosure Flowchart" prepared by Stewart Default Services. The proceedings start with the recording of a “notice of default," usually after three-months of missed payments. Thereafter, there begins a three-month waiting period followed by a notice of trustee sales.

Alvarez writes that lenders assert the ‘dual track’ is needed because if efforts to salvage the mortgage fail, the house can be sold at the trustee sale as quickly as possible. In turn, consumer advocates contend that too often the ‘dual track’ system breaks down and prevents mortgages fixes that would be less costly and more compassionate than foreclosure.

Unfortunately, homeowners have few options to reverse the foreclosure once it is initiated. In his article Mr. Alvarez a pointed out a statistic provided by Kevin Stein, associate director of the California Reinvestment Coalition, citing a survey of foreclosure counselors which revealed that 60% had seen clients notified of foreclosure while negotiating mortgage modifications.

What can a homeowner notified of foreclosure during modification negotiations do in an effort to save his or her home? One course of action is to cure the deficiency but there is little chance that persons in this position have the means for taking this step.

Another option, as provided by Melinda Opperman, vice-president for community outreach at Springboard, a Riverside-based nonprofit organization providing free foreclosure counseling, suggesting that any time a homeowner receives a notice of foreclosure under these circumstances action must be taken before the house is sold at a foreclosure auction, especially to a third party, because it is unlikely a judge would require the buyer to return it. Her advice is for the homeowner should quickly seek help from a government-approved agency, such as Springboard, which can in turn stop unwarranted foreclosures by calling a bank’s advocacy department or going directly to the office of a bank president.

So will ‘dual tracking’ in California be eliminated any time soon? It is unlikely. Kevin Stein said his Coalition plans to reintroduce legislation that would legally mandate mortgage servicers in California to halt all foreclosure actions which deciding whether a homeowner is eligible for a mortgage modification. However, in the past a similar proposal failed to pass the California state legislature. (See California Residential Non-Judicial Foreclosure Flowchart for Reference at

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