So far, this is the best description I could find for the updated loan modification law without having to shell out $50.

Based on that bit of research, I would encourage anyone looking to modify their mortgages to be very careful. As with anything that is supposedly designed to help people out, there are tons of scams out there. Take your time and do your research.

I will continue to research this subject and post anything that I find that conflicts with the information below.

I researched as best I could, but please do not take this as a definitive reference on the subject. PLEASE do your own research before jumping into ANY loan modification program.

Trial Period Requirement:

No payments will be made to the lender/investor, servicer or debtor until after the Trial modification Period is successfully completed and the entry of agreements to the plan between the servicer and the Treasury’s financial agent.

Modification will be in effect the first calendar month after the trial period is completed successfully. Successful completion is defined as being current as per MBA calculation at the End of the Trial Period.

Debtors in foreclosure restart states will fail the Trial Period if they are not current when the Foreclosure sale is scheduled to being.

The lender/investor, debtor, or servicer will not be paid during the Trial Period, if the Trial Period is completed unsuccessfully, or if the servicer has not entered into the agreements of the plan.

Trial Period Duration:

The Trial Period will last for the duration of 90 days (meaning 3 modified term payments) or longer if it is necessary in order to comply with the contractual obligations of the investor. In order to receive a Domestic Economical Modification, the debtor must be current upon the end of the Trial Period.

Escrows:

Servicers must escrow for debtor’s mortgage-related insurance payments and real estate taxes if they can process these payments or are using a third party for this already. If they can not, they must be able to do so within 6 months of agreeing to the Plan.

Requirements for Counseling:

The servicer must inform debtors with a Back-End DTI of 55% or higher about the advantages and affordability of counseling. In addition, they must give the debtor a letter informing said debtor of their requirement of counseling and provide the debtor with a list of HUD-approved counselors. In order to start the counseling, this letter may be a requirement. The modification will not be in effect until the debtor affirms in writing that he/she will get counseling.

Assumable:

In the event that the modified loan was assumable before modification, the Domestic Economical Modification will void this.

Debtor Modification Fees:

The debtor will not be charged modification fees.

Modification Fees the Investor can Reimburse:
The investor can reimburse modification fees and charges, including notary fees, property valuation, and other fees. This will take place through the normal procedure between the investor and servicer.

Unpaid Late Fees Waived:

Late fees that are not paid shall be waived for the debtor, including late fees before and during the Trial Period.

Credit Report:

Credit report cost will be covered by the investor.

Posted in: Foreclosure
Tags: Foreclosure, loan modification