"Trial Period" ? Exactly what is that?
Are you certain that you are dealing with the Mortgage Holder, and not some Scammer or Con Artist?
See a Real Estate Attorney for Legal Advice, before committing to this "Program".
Another thing to be aware of Ned is that although the trial period is formally set up for 3 trial payments they almost never resolve that quickly. Most homeowners pay 6, 7, 8 or even 9 or more payments on the trial plan before it is ultimately resolved.
Keep in mind that of the approximately 1.4 million trial modifications inititated under HAMP only about 470,000 have resulted in a permanent loan modification. Even more frightening is the fact that 25% of the permanent loan modifications that are over 12 months old are 60 or more days delinquent again. What does this tell you? The permanent modification achieved are not solving the long-term problems of the borrowers. Follow the link for a more in-depth discussion about how HAMP is failing to prevent delinquency.
I want to start by saying that I am not an attorney and this is not legal advice...just my experience with clients who have gone through loan mods. And as an additional disclosure....I have helped people get loan mods and do not charge for this.....so
Yes, this is normal.....the normal procedure for a loan mod is a 3 month trial period. Since you are not making your normal payment and keeping your agreed upon loan, it is a delinquency. Once you are done with the trial, you should be offered a permanent loan mod with similar terms.
Hope this helps,
Paul J. Molinaro, M.D., J.D.
Attorney at Law, Physician, Broker
980 Montecito Drive, Suite 206
Corona, CA 92879
** This post and all others I make on Internet are for informational purposes only. None of the information or materials I post are legal advice. Nothing I post as comments, answers, or other communications should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship. While I try to be accurate, I do not guarantee accuracy.
Be careful to understand exactly what the lender is offering you!
Most likely they are offering you the HAMP (Home Affordable Modification Program) or HARP (Home Affordable Refinance Program).
I will need more information to assist you with your dilemma.
What is your loan balance? Do you have a first and second? What do you believe the current value of your home to be?
Make certain you receive the terms in writing; otherwise you may not have recourse should they renege!
Have you filled out the hardship, etc. packet?
The banks argument maybe, if you can make the full payment why should they modify?
Again, have a full understanding of what the bank is offering you!
Another question: Is your loan a refinance or construction loan?
Who is your lender? Each institution handles their mods differently!
Prudential CA Realty
Like some of the other answers, they are just trying to dangle a carrot in front of you to see how long you can still make payments before giving up.
If you have a 1st & a 2nd loan it is possible for the 2nd to be wiped out completely or settled for much much much less than what was originally owed. It's the 1st that ultimately has to make sense.
If your property value is worth much less than what you owe on the 1st, you need to just do a Short Sale, otherwise you just area glorified Renter. As you wait 5-8yrs for prices to REALLY go back up, you're just "renting" until you basically just break even.
With a short sale you CAN buy another home again in only 2yrs! FHA will actually give you another loan in only 2yrs so long as you've been on time with other bills. Build your equity back up from the bottom of the market.
Let me know if you'd like to talk about your options further. I can help you either way, if you'd like to explore Loan Modification a bit more or talk about how the Short Sale process works.
This is exactly the reason that loan modifications are not working. This is not an unusual tactic being used by the banking industry right now to squeeze every last penny out of you before it goes into bankruptcy. Loan modifications DO NOT work if they DO NO reduce the PRINCIPAL balance. The banks will just turn you into a renter. Example, if they agree to lower your interest rate to 1% for five years, but not the principal balance then you would still owe that big balance at the end of five years. This is the definition of a renter, is it not? They are just kicking the can down the road.
Email me you details and situation and I will tell you if you really qualifiy for a loan modification and then ask you if you really want one with their terms. If you don't I will list you home and sell it in a short sale for "FREE!"
I am not entirely clear about what is happening to you but it does not sound good. I have never heard it called a "Trial" period. But, I know of many people who have been advised by their bank to stop making payments to demonstrate "hardship" ... and then they wind up in foreclosure.
As I understand it ... the bank told you to stop making payments but they would report the delinquencies to the three Credit Agencies? But you continued to make the payments ... and they still reported it? Of course, this is not right. This causes terrible damage to your credit score. If you can prove you made the payments, you should contact the Credit Agencies and get the black marks off your credit report!
Do you owe more than you can sell the house for?
Send me an Email with all the details and maybe I can give you some advice or make some suggestions.
I will help if I can.
Prudential CA Realty