CFPB rules generally will temporarily prevent a mortgage servicer from going forward with a foreclosure, if they receive a complete loan modification application, until they've made a decision on the application. For instance, if a mortgage lender receives a complete modification application before a foreclosure is filed, they must review and make a decision on the application before the foreclosure can be filed. If a mortgage lender receives a complete modification application at least 37 days before a foreclosure sale is scheduled, the bank must either cancel the sale or review the modification application and respond to the home owner with a yes or no answer on the modification.
The loophole in all of this is that mortgage servicers get to define what "complete" means. The regulations state that a "complete loss mitigation application means an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower." (12 CFR 1024.41) In other words, a servicer can try to request more and more supplemental documentation for the application to be considered "complete." Hiring a foreclosure lawyer can help ensure mortgage lenders do not move forward with a foreclosure while you're trying to get a modification.