I live in California and am in the initial stages of foreclosure. Three weeks ago I sent my mortgage servicer an application for a loan modification under HAMP. I haven’t heard anything from the servicer. What should I do?
You should contact the servicer to verify that it received your loan modification application. In California, most servicers are required to send you an “acknowledgement letter” once it receives your application. Because you have yet to get such a letter, one of two things is going on:
- your servicer received your application and is in violation of the law (in which case you should contact the servicer and request the letter), or
- the servicer didn’t get the application (in which case it’s even more urgent that you contact the servicer).
California’s Homeowner Bill of Rights
In response to reports of mortgage servicer abuses and dual tracking (when the servicer simultaneously considers a loan modification application while continuing with foreclosure), California enacted the Homeowner Bill of Rights (HBOR), which went into effect on January 1, 2013. HBOR prohibits all servicers from engaging in dual tracking – which means your servicer cannot foreclose on your home while it is making a decision on your HAMP application.
HBOR also requires mortgage servicers to provide certain notices in the foreclosure process and when it receives a loan modification application. One of those notices, the acknowledgement letter, comes into play in your situation.
HBOR’s Acknowledgement Letter Requirement
Pursuant to HBOR, your mortgage servicer must send a written acknowledgement letter when it receives your HAMP or other loan modification application. It must do so within five business days after receiving your application. There is an exception to this requirement for small servicers (those that complete less than 175 foreclosures per year) – but hardly any servicers fit within this category.
The acknowledgement letter is important for several reasons. First, it lets you know that the mortgage servicer did, in fact, get your application. And it provides written proof of this fact – which you might need if the servicer messes up down the line.
But it also provides crucial information in order for you to ensure that your application is complete. This is important, because the ban on dual tracking is not triggered until you have submitted a complete loan modification application. Under HBOR, the acknowledgement letter must identify documents missing from your application and the deadline to submit them. If you submit the requested documents, then your application is complete.
What If Your Servicer is Part of the National Mortgage Settlement?
In late 2012, 49 states attorneys general reached a settlement with five of the largest servicers in the nation: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo. The National Mortgage Settlement (NMS) prohibits these services from engaging in dual tracking and also requires them to provide certain notices in the foreclosure and loan modification contexts.
Like HBOR, the NMS requires its signatories to provide written acknowledgement that it received your loan modification application. This must be done within three business days of receiving your application. Within five business days they must let you know what, if any, information or documents are missing from your application.
There is one caveat. In order for the dual tracking ban to kick in for NMS signatories, you must submit your complete loan application at least 15 days before a scheduled foreclosure sale. Since you are at the initial stages of the foreclosure process, however, you shouldn’t be butting up against this deadline. (Learn more about deadlines to submit HAMP applications in order to stall foreclosures in California.)
Remedies for HBOR Violations
If a mortgage servicer violates a provision of HBOR before a foreclosure sale occurs, you can get an injunction (a court order telling the servicer to do something, like providing an acknowledgement letter, or refraining from doing something, like foreclosing). You can use HBOR remedies against an NMS servicer as well, if, as in this situation, the servicer violated both HBOR and NMS rules.
If you can’t get your servicer to send you an acknowledgement letter, you should contact an attorney immediately. The attorney may be able to get the letter or get an injunction preventing a foreclosure sale, if it comes to that.