You might have breathed a sign of ease when your lender put you on the trial loan modification – ultimately thinking that you have found the solution to your unaffordable mortgage payments. However, a trial mod is not the same as a permanent modification-as many homeowners have found out. Why would your bank suggest you a lower mortgage payment only to take it away again a few months later? Confused, angry and frustrated homeowners need to understand a duo of very significant facts about the loan workout process so they can avoid this from happening.
Loan modification help is only available to those homeowners who can prove that they meet the standard approval guidelines. The sad fact is that the majority of people simply do not know what is required in order to qualify for a permanent loan workout, and simply pack out the application without understanding what their lender needs to see in order to approve them. In addition, banks are so slammed with requests for help that they began suggesting trial loan modifications to delinquent borrowers before the applications had been fully reviewed. The idea was to have the homeowner begin making payments again, and their application paperwork would be looked at later to determine if they actually qualified for a permanent loan modification.
This practice of handing out trial modifications to homeowners before determining their eligibility has done more harm than good. For one thing, it gave borrowers the false impression that they had already been approved for a loan workout when in fact they had not. Secondly, the Treasury Department ordered lenders to stop this practice, and not suggest any more trials until the homeowner’s paperwork had been downright reviewed and they were determined to be qualified for a loan modification. The federal plan calls for homeowners to be fully qualified before a trial mod should be suggested, and then once the Three improvised payments have been made on time, the loan workout is to become permanent automatically.
What can you do now if your trial loan modification has been yanked out from under you? The reason this has happened is because the paperwork you provided to your lender did not prove that you fit the approval guidelines. You need to prepare and submit an updated application that will showcase in black and white that you fit into those guidelines. Your financial statement-which is a breakdown of your monthly income and expenses-must prove that you are an eligible candidate. This means that your debt ratio, target payment and other significant calculations meet the criteria for approval. If you are not sure how to do this correctly, you may want to use a software program designed specifically for homeowners to help them apply correctly. That way your trial modification will turn into a permanent loan modification.