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Q: How does the trial loan modification work?

Question: How does the HAMP trial loan modification work?

Answer: The goal of the Making Homes Affordable Program is to bring your total housing payment down to 31 percent of the gross household income.

Your lender will give you a trial period of at least 90 days to see if you can make the new payment on time before making the home loan modification permanent.

Here are someĀ guidelines to qualify for a trial loan modification:

  • Total housing payment includes principal, interest, taxes, insurance and association dues, if applicable. It would also include private mortgage insurance if it is a part of your current mortgage payment.
  • You must have verifiable income in order to qualify for assistance through this program.

Mike Rockwood has modified five of his own loans, including his personal residence and investment property. He has created a top-notch workbook to walk you through the steps of fighting to get the best terms on your loan modification.

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  • All eligible loans will enter into a 90-day trial period.
  • You will be required to submit updated income documents at the time the trial modification is offered.
  • If you comply with the terms of your trial modification and the income is appropriately verified, you should receive a permanent modification to your mortgage.

The new payment will be achieved through the use of three options in the following order:

1) The first method to reduce your total housing payment down to 31% is to reduce the interest rate;

2) If the payment is still too high, the next method will be to extend the mortgage amortization period to a maximum of 40 years from the date of modification;

3) The last method to further reduce your payment to meet the requirement is the forbearance of principal creating a balloon payment at maturity.


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