Flagstar Bank Hit With Home Loan Modification Lawsuit

Recently, Flagstar Bank was hit with a home loan modification lawsuit filed by an Ohio couple who alleged that the bank failed to follow federal guidelines when they applied for a mortgage modification by engaging in a process known as “dual tracking”. The plaintiffs filed the home loan modification lawsuit in an Ohio federal court against Flagstar Bank. They alleged that the company violated the new rules regarding home loan modifications when the couple fell behind on their mortgage in 2014. This ultimately led to the bank beginning foreclosure proceedings.

According to the home loan modification lawsuit, Flagstar Bank illegally and incorrectly processed the loan modification request which led to the foreclosure of their home in Sycamore Hills, Ohio. The foreclosure proceeding began less than a month after their loan modification request was submitted, their lawsuit contends.

The plaintiffs allege that the bank “dual tracked” the home loan modification request. This means that Flagstar Bank allegedly began foreclosure proceedings while telling the plaintiffs that their home loan modification request was still being processed.

At that time, new federal rules were put into place to protect homeowners in this very situation. These provisions went into effect in January 2013, creating a newer minimum standard to try and protect those facing foreclosure.

In addition to federal laws protecting consumers, many states have laws banning dual tracking. The plaintiff’s home loan modification lawsuit holds that Flagstar Bank’s mismanagement of their petition failed to meet federal requirements before going into foreclosure.

During the economic troubles of the 2000s, home loan borrowers took major hits. The plaintiffs say that they suffered a sudden decrease in income. In response, the government passed new legislation and regulations including the HARP programs to try and alleviate the problems. In addition, many states offer additional protections to individuals seeking home loan modifications.

Such laws and regulations typically restrict dual tracking, and require a greater degree of transparency that makes it easier for borrowers to try and improve their situation, head off foreclosures, and mitigate the economic damage that foreclosures cause to all parties.

Home loan modification lawsuits like the aforementioned have been filed by homeowners affected by the housing collapse. They allege that banks have failed to follow the new rules that protect homeowners from foreclosure.

Those with a mortgage modification application pending cannot be foreclosed upon until the lender has resolved the application. If the bank denies your request for modification, you have the right to appeal the decision. The lender must consider and decide on your appeal. This process can add months before the bank is legally authorized to foreclose on your property. This gives you more time to resolve financial issues and figure out your options. This remains true even if you didn’t get the modification you were originally looking for.

Talk to a Home Mortgage Modification Lawyer Today 

Kohl & Cook Law Firm, LLC represents the interests of homeowners who are facing foreclosure or applying for a mortgage loan modification. Call our Columbus mortgage modification lawyers today to schedule an appointment, and we can begin discussing your next steps right away.