Once an application for a mortgage loan modification is accepted, a lender usually requires a borrower to make a series of trial modification payments to demonstrate the ability to once again pay the mortgage. Once this trial period is successfully completed, typically a homeowner is more likely to receive a permanent modification of a home loan.
However, some homeowners are still denied a permanently modified mortgage even after making trial modification payments. Why? A lender may have only promised to consider them for a permanent modification upon successfully making trial payments.
A trial period offers a borrower immediate payment relief, while the lender processes information and documentation provided by the borrower to determine if it can offer a permanent loan modification. It also gives the borrower an opportunity to ensure that he or she has the ability to afford the lower monthly mortgage payment.
If a borrower can’t timely pay only three months of modified mortgage payments, it demonstrates to a lender that it’s likely that he or she isn’t going to make timely payments for the next 20 or 30 years, thus causing a borrower to fail the trial period and have the modification denied.
There are times when a borrower makes all three trial payments in a timely fashion but still receives no verification of the permanency of the loan modification. The lender may ask for additional financial documentation to be provided or simply may need more time to process the application. In this situation, a borrower must usually continue to make mortgage payments in the designated trial amount until a final decision is made.
Thus, three months may run into six, eight or ten months of trial payments with no final decision. It is important for borrowers to maintain communication with the lender and continue to make payments until a permanent decision is rendered.
Borrowers who need a loan modification should strongly consider an experienced and qualified loan modification attorney to assist them during the loan modification process, especially to ensure that their lender plays by the rules as much as possible.
If you are facing foreclosure and require assistance with a loan modification or other form of loss mitigation, contact our Fort Lauderdale bankruptcy lawyers by calling 954-523-HELP (4357) and see how we can help.