A Trial Loan Adjustment is when your lender/servicer puts you as a homeowner into a temporary Mortgage Adjustment while they evaluate your paperwork to see if you qualify for a permanent Mortgage Modification. The temporary terms are usually for a period of three months. In general, the Mortgage payments should be less than what you are currently paying. Keep in mind that the trial Mortgage Restructuring terms will not be the same as the permanent Loan workout terms.
One thing that you have to be mindful of is during the trial period you must make all of your payments on time. This is a standard condition of the trial period, else they will deny your request for a Loan Restructuring and you may find yourself in foreclosure soon.
These types of temporary Loan Restructuring programs are all a little different depending on the bank and what state you are in. So I will provide a few more tips for those that are being offered such programs and these are general guidelines only.
One of the key expectations is the homeowner will receive upfront trail Mortgage Restructuring paperwork directly from the mortgage company outlining all the terms before ever making a trial payment. You will need to sign the trial papers and send that plus the first trial payment back to the mortgage company.
While the trial period is moving forward, the note holder will fully evaluate your Mortgage Adjustment package to determine if you qualify. If you are working with an Attorney, the full Loan Workout package would have been submitted to the note holder prior to the trial period. In these cases, the reputable Attorneys already know you will qualify and it is a matter of giving the note holder time to evaluate everything.
For the most part, I think these trial periods are more of a stall tactic for the lender to get money from the TARP funds immediately instead of waiting for the permanent Note Restructuring program. Remember the permanent program terms take 60 to 90 days, and the trial period begins soon after discussions with the mortgage bank. This gives the bank money upfront and more time to stall and commit to a Loan Restructuring. Of course, the note holder are working in their best interest and not the homeowners.
If you have tried a Loan Adjustment on your own, usually the bank takes that information over the phone and later offers the trial Mortgage Adjustment. If this is the case, the process above is not always followed. In most cases, the servicer have verbally qualified you bases on a phone conversation or partial paperwork sent over by the homeowner. I would be very leery of any verbal commitments by the bank, “buyers beware”.
Many times the homeowner never receives the upfront trial Mortgage Restructuring paperwork and is only going on a verbal by someone in the bank. Then after the trial period, they never receive any Note Workout documents and find their home being foreclosed on. This happens sometimes in part because the lender verbal qualifications did not match up with the paperwork sent over by the homeowner during the trial period.
Unfortunately, the banks are taking advantage of homeowners in this situation, in part because homeowners just don´t know what to expect or even demand. So, if this is happening to you, you know now what to ask for, and that is upfront trial Note Restructuring papers and final permanent papers.
If you are not getting these papers as described, then I say buyer beware. You can contact a Loan Modification Attorney at that point or just ride it out and see what happens. Just a quick note on the Note Restructuring Attorney, the reputable ones are almost 100% successful with permanent workout programs after the trial period, so feel confident that you´re in good hands.
If you find yourself at odds with your bank in a trial modification and can´t make progress, we have help for you through one of our contracted Loan Modification Attorneys at http://www.CallALMS.com .
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