The California Homeowner’s Bill of Rights which became law on January 1, 2013 provided numerous defenses and benefits to struggling homeowners. As any other law, it can be very confusing, and often missquoted. It started the process of eliminating the process known as Dual Tracking, which is where a lender is foreclosing on a homeowner’s property while at the same time being in the process of working out some form of resolution, such as a Modification, Short Sale or some other agreement with the homeowner.
Unfortunately, most homeowners are under the impression that the law took full effect on January 1, 2013. This is NOT THE CASE! The law takes effect in stages with the final part restricting Dual Tracking taking effect on January 1, 2018. Until that time lenders can employ Dual Tracking except in two instances:
Until the point that the Lender issues a final approval of a Short Sale the Lender can continue the foreclosure process while negotiating a Short Sale. Once the Short Sale is approved by the lender then and only then does the Lender need to stop all foreclosure actions pending the closing of the Short Sale transaction.
So, it is important to keep any eye on any pending foreclosure action that is taking place during any Short Sale negotiation to make sure the property is not lost to the Lender.