Florida Foreclosure Process, Ability to Pay and Dual Tracking

How Do the New CFPB Rules Affect Florida Foreclosure Laws?

The Consumer Financial Protection Bureau recently announced the finalization of its ability to pay rule and its prohibition on dual tracking.  In plain English, the ability to pay rule essentially mandates that lenders verify that borrowers have the wherewithal to pay back their loans, in the case of loans that are not standard fixed rate.  This will likely end the practice of extending loans to borrowers with no documentation of income – the sort of loans that were pervasive at the height of the housing bubble.
Perhaps more importantly for distressed Florida homeowners, the new regulations are supposed to stop “dual-tracking,” in which a bank or servicer proceeds with foreclosure while evaluating a homeowner for a loan modification.  Unfortunately, both of these measures fall short on a number of accounts.

Why Are These Measures Unlikely to Help Florida Homeowners in the Foreclosure Process?

1.     First, the ability to pay rules are prospective.  This means that Florida homeowners currently under threat of foreclosure will not be able to argue, as a defense to foreclosure, that their lender failed to properly verify income and ability to pay – at least under the new regulations.  There are always equitable defenses to be made regarding bait and switch tactics at origination, but these new regulations are unlikely to help currently distressed homeowners.
2.     Secondly, this is yet another government act regarding housing that represents a total swing of the policy pendulum.  Recall that the government basically encouraged lending to marginal candidates for home loans, in the name of promoting homeownership.  Yet during the height of the bubble, the government did not provide oversight to make sure that people who qualified for better terms were so informed. Instead, countless homeowners were presented with exotic loans instead of the vanilla, fixed rate loans that they might have qualified for, and that might have kept them in their home with terms they could afford.  Government policy encouraged the bubble, and only now is attempting to provide some safeguards for uninformed prospective homeowners.
3.     Thirdly, the dual tracking rules are unlikely to help Florida homeowners, as they depend too much on the word of bankers and servicers.  Essentially, banks and servicers will not be required to put foreclosure proceedings on hold as long as they contend that a loss mitigation or loan modification package submitted by a homeowner is not “complete.”
As any Florida foreclosure attorney knows, relying on the word of banks and servicers to determine whether a loan modification package is or is not complete is farcical.  Our attorneys have personally handled hundreds of foreclosure cases, and getting word from a bank or servicer that a loan modification package is or is not complete is a time consuming practice filled with contradictory statements from the banks and their representatives.  Thus, we have no reason to believe that dual tracking will cease.  Giving banks an excuse to avoid the prohibition on dual tracking based on something as vague as whether a loan modification package is “complete” or not represents an epic failure in regulatory drafting.

How Can the Attorneys at King, Nieves & Zacks Help Me?

The experienced Florida foreclosure attorneys at KNZ law are happy to discuss any of the problems you may be facing that these new rules seek to address.  We have represented countless homeowners who have been subject to the “dual tracking” that proves so frustrating, and we have seen every different kind of bait and switch scam perpetrated upon homeowners at origination.
Unlike many of our competitors, we will never pawn your work off to inexperienced attorneys or unlicensed paralegals.  We encourage you to ask any law firm you may consider whether one experienced attorney will personally handle all of the matters in your case, or whether random attorneys will be assigned to your case as the need for work arises.
Given that banks and servicers are consistently encouraged to provide a single “point of contact” for borrowers, why would you trust your home to attorneys whom you’ve never met, who don’t know anything about your case or goals for settlement, and who may be woefully inexperienced?  At KNZ law, you can be assured that one of our experienced attorneys will personally attend to your case, will be available to personally answer your questions, and will never allow unlicensed paralegals or surrogates to have any say on strategic matters.  Ask our competitors if they can say the same.