When getting a Loan Mod, it's now a policy that your lender, either through HAMP or trough an internal modification, take you through a trial period with a modified loan. In most cases, this lasts anywhere between 3 to 6 months. Now what bothers me about this the most is that the holder, in many cases, is giving out these trial periods without you filling anything out. Now nothing in this world is for free, so people are jumping on any kind of relief that they can get. The lender simply sends out the paper work for you to fill out. What they have told many of my clients is that if they qualify they will send out more paperwork for them to fill out. Here is what I am noticing. The homeowner is pre-approved for the trial modification, and all is thrown in the air. All one can do is cross their fingers and hope that they qualify.
What the lender is not telling you is where your Trial Mod money is going. If you look at your statement that is sent, you will notice that it is not going towards your mortgage. What I have found from speaking to a few different people in the mortgage business is that the lender will put it towards escrow, maybe interest only, or my personal belief, the sock drawer. You will notice the difference between the trial payments and the original payment will be added to what you are behind. sometimes the lender will even want that in a balloon payment and the whole while you haven't been approved for the loan mod. If in fact you are denied, your statement will reflect that 3-6 months as being default, as if you haven't even made a payment, or that it is an incomplete payment.
The trial period is very clear, they want to see if you will be able to maintain the mortgage payments if they were to modify it. What you need to do is to make sure tat you send your paperwork in first and not accept the pre-approved trial mod. The reason why is because there will be too much confusion in the end. If you have already filled out the paperwork and are about to submit, make sure that you are getting it in writing that once the trial period is over, that it becomes permanent immediately. If you have to fill out more paperwork, pack a lunch, cause you are pretty much starting over and have a pretty decent wait time in most cases. If you were late or missed the trial payment do NOT listen to what the lender says about forgiveness, YOU WILL BE DENIED!
If you guys have any questions or comments please let me know.
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