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"The median monthly payment reduction for borrowers enrolled in
the (HAMP) program is $522" - DSnews.com
I Just Got a Trial Period - What Do I Do Now?
So after months of sending in paperwork and waiting on hold and talking to the lender and working through the loan modification process you have received a packet in the mail that looks like a modification offer. The only problem is, when you read through the overly complex documents it seems to say that you are being offered a new modified loan, but for only 3 months. The paperwork is calling this the trial period and you can’t help but wonder, what is this trial period and how do I make this modification permanent.
The trial period, also called the forbearance period, is a part of many modifications these days and is a common part of the HAMP program. Basically this is a period where the lender sees if you will in fact be able to afford and maintain payments that this new modified loan offers. If you do well in the trial period they will then modify the loan permanently. But how do they judge success? The most important thing they are looking for is that you make your payment on time every single month. Not 3 days late or by the 15th of the month but instead they want to see the payment there on the first of the month every month. Also, it is important that you do not make any changes to your income and expense during this time. Do not take the fact that your lender dropped your payment $680.00 per month as a sign that you should buy a new car with a $350.00 per month payment. At the end of the trial period, your lender is going to ask for updated documents again to verify your income and expense. If this has changed drastically then you could throw off all of your ratios which are what the loan modification offer was based on in the first place.
Also realize that there are problems with the trial period model as well. Many times the trial periods end up lasting 6 or 7 months or more as the bank grinds through getting you an offer out. In these cases just continue making the trial payment on time and continue communication with the bank. Also, if your trial period was offered based on verbal figures then you could be in for some bad news because when the bank wants hard copies of those figures if they don’t match you may be too far off to qualify for a permanent loan modification program. In this situation you need to continue to push them until they tell you what they want to see for you to qualify.
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