Suing Your Lender for Dual Tracking in Michigan: RESPA Violations and Foreclosure Defense
Dual tracking is an illegal practice where a lender moves forward with a foreclosure auction while simultaneously negotiating a loan modification with you. In Michigan, you can sue your servicer under federal RESPA laws to secure an emergency injunction to stop the Sheriff's sale.
Navigating the mortgage modification process is incredibly confusing. Many Michigan homeowners submit all their required financial documents, believing they are safe, only to discover their lender is secretly proceeding with a Sheriff's sale. This predatory practice is known as "dual tracking." It is entirely illegal, but because Michigan is a non-judicial foreclosure state (meaning the bank does not have to go to court to foreclose), the burden is on you to stop them. If you suspect your lender is dual tracking, you should browse our directory to find a highly aggressive foreclosure defense attorney in Michigan immediately.
Understanding Dual Tracking and Federal Laws
Lenders rely on the fact that most homeowners do not know their rights. Dual tracking is strictly prohibited by both federal regulations and state interpretations.
Federal CFPB Rules vs. Michigan State Protections
The core protection against dual tracking comes from the Consumer Financial Protection Bureau (CFPB) under the 12 U.S.C. § 2605 and its accompanying regulation, 12 C.F.R. § 1024.41. Under this federal rule, if you submit a complete loss mitigation application (a loan modification request) more than 37 days before a scheduled foreclosure sale, the servicer cannot initiate or proceed with the sale. They must evaluate your application and give you a written decision first.
While Michigan does not have a separate, distinct anti-dual tracking state statute, Michigan courts enforce these federal RESPA rules vigorously. Cases like Houle v. Green Tree Servicing, LLC, No. 14-cv-14654 (US District Court EDMI 2015) confirm that a homeowner can sue for actual damages and statutory remedies if a loan servicer violates these mandatory loss mitigation procedures.
Step-by-Step Process to Stop Dual Tracking in Michigan
Because Michigan banks do not need a judge's permission to foreclose, you must actively file a lawsuit to force the bank to stop the sale.
Step 1: Proving Dual Tracking in Court
To win a dual tracking case, you must have an impeccable paper trail. You need to prove that you submitted a complete application and that the bank confirmed receipt. Save every email, fax confirmation, and letter from your servicer. If the bank sends you a letter stating, "Your application is under review," while simultaneously publishing a foreclosure notice in the local county newspaper, you have clear evidence of dual tracking.
Step 2: Filing an Emergency Injunction
You cannot simply call the bank and ask them to cancel the sale. Your attorney must file a civil lawsuit against the lender in a state court, such as the Wayne County Circuit Court, Detroit or the Kent County Circuit Court, Grand Rapids. This begins by filing Form MC 01, Michigan, State Court Administrative Office, Summons. Immediately after filing the complaint, your lawyer will file an Emergency Motion for a Temporary Restraining Order (TRO). A judge will review this motion, and if they see evidence of a RESPA violation, they will sign an order legally forcing the county sheriff to cancel or postpone the auction.
Step 3: Holding Loan Servicers Liable for Attorney Fees
Under 12 U.S.C. § 2605(f), if a loan servicer violates federal dual tracking rules, they are liable to the borrower for actual damages, as well as statutory damages up to $2,000 if a pattern or practice of noncompliance is established. Crucially, the statute includes a mandatory fee-shifting provision. This means that if you successfully sue your lender for a RESPA violation, the judge can order the bank to pay your attorney fees. This makes it much easier for homeowners to secure high-quality legal representation, as the banks are ultimately held financially responsible for their illegal actions.
How Much Does it Cost to Sue in Michigan?
Filing a lawsuit in Circuit Court to stop a foreclosure involves state filing fees and legal retainers, though RESPA allows for the recovery of attorney fees if you win.
| Expense Type | Estimated Cost (USD) |
|---|---|
| Circuit Court Filing Fee (Complaint) | $175 |
| Motion Fee (For Emergency Injunction) | $20 |
| Attorney Retainer for Injunction | $3,000 - $5,000+ |
| Potential Restitution from Lender | Covers your legal fees and actual damages |
How Long Does the Process Take?
An emergency injunction (TRO) can be secured in a matter of 24 to 48 hours if a Sheriff's sale is imminent. However, resolving the entire RESPA lawsuit and forcing the bank to finalize a loan modification can take anywhere from 6 to 18 months of ongoing litigation in Circuit Court or Federal District Court.
Frequently Asked Questions (FAQ)
Does submitting a modification application 10 days before the sale stop it?
No. Under federal CFPB rules, the strict dual tracking protections only apply if you submit a complete loss mitigation application at least 37 days before the scheduled foreclosure sale date.
What happens if the bank sells my home while I am under review?
Under federal RESPA (12 U.S.C. § 2605(f)), setting aside a completed sheriff's sale is unavailable; you can only recover actual damages, statutory damages, and attorney fees. To void or set aside a sheriff's deed after the auction, your attorney must assert a state-law wrongful foreclosure claim under Mich. Comp. Laws § 600.3204 and demonstrate prejudice under the Michigan Supreme Court precedent Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98 (MI Supreme Court 2012).
Is it dual tracking if the bank asks for more documents?
If the bank claims your application is incomplete, they must give you a reasonable deadline to submit the missing documents. They cannot proceed with a foreclosure sale while you are within that allowed timeframe to provide the requested information.
Can I report the lender to a government agency?
Yes. You can file a formal complaint with the Consumer Financial Protection Bureau (CFPB) online. While this creates a federal record of the violation, filing a lawsuit locally is the fastest way to get a court order to stop the actual sale.
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