Archive for December, 2009

There are a number of Home Affordable Modification Programs available for those of you that are having a hard time conforming to your loan terms during these difficult economic times.  Before you explore your options, there are a number of issues that have to be considered, including terms and trial periods.

Is a Trial Period Required to Get a Modification?

The general answer to this is yes, particularly If your mortgage modification is part of a government sponsored program. For example, Fannie Mae’s guidelines require a three month trial period if your loan is in default when the trial period starts, or four months if your loan is current but default is imminent when the trial period starts. Alternately, Freddie Mac requires a three month trial period.

What is the Purpose of the Trial Period?

The purpose of the trial period is to test a customer’s commitment to make the modified loan payment because the loan servicer does not want to complete the loan modification requested if it does not truly help your financial situation and if a future default is probable.  This trial period also permits you to make the modified payment while the lender completes the documentation.

Will a Trial Period Stop or Postpone a Foreclosure?

Generally loan servicers will not pursue foreclosure action during the trial period, but that is contingent on you complying with all the requirements of that trial period.  State laws dictate whether the foreclosure process can be delayed during the trial period, and how soon after the trial period ends it can resume. You should check with your local state laws to be sure of your protection.

Are there Additional Requirements During the Trial Period Other than the Payment?

The primary requirement is that you make the required payment on time during the trial period.  However, the lender might require you to submit other documentation or proof of financial fitness, and also may require you to complete their loan modification paperwork during this trial period.

Once Begun, Can the Terms Change During the Trial Period?

Depending on the information collected during the trial period, and if there are changes to the financial circumstances of the borrower, the terms might change.  It is important to provide accurate information to the lender during this process.

How Will my Credit Rating be Affected During the Trial Period?

The answer to this depends on the status of the loan before entering the trial period, and if you are participating in a government sponsored program such as Fannie Mae or Freddie Mac. You should speak with your lender about your particular situation.

Is the Loan Servicer Required to Complete the Modification if I Meet the Requirements?

There is a financial incentive for lenders to complete the modification if they are part of the Making Home Affordable Program.  You should check with your lender to see if they are participating in a government sponsored program.

What Happens if I Miss a Payment?

If you miss a payment during the trial period, your eligibility to participate in the program might end. You need to check with your lender to see what rules exist for late or missed payments, or if there is a right to pay off the remaining balance due during the trial period to ensure continued eligibility.

Bottom line is that you should speak to a trusted mortgage broker or lender to find out about your individual circumstances, and read the information carefully to ensure you understand the terms of your particular loan modification program.  For referrals to trusted lenders, please call the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

 

 


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