Know the Difference Between Trial and Permanent Loan Modification

This is a sponsored guest post written by Joel Jacobi on behalf of American Residential Law Group. Post powered by Sponzai.

Most of my clients don’t understand the difference between a trial loan modification and a permanent loan modification.  I’m writing this article to help homeowners better understand and navigate their way to successfully modify their home loan(s).  Most homeowners understand only what they see in the paper or published reports. This is one reason why people are saying " I’m reading that everyone is getting help, but I’m getting nothing".  The headlines read: 650,000 have received help under the new government modification program. What the article leaves out is the fact that these are all TRIAL loan modifications & all the information must be submitted again for review in 3-5 months.  


During the 3-5 month trial period you will:

  1. Not receive payment coupons for scheduled payments
  2. Still considered delinquent on your loan
  3. Will have to submit financial via fax again!  

Homeowners have a hard enough time submitting their paperwork to lenders the first time without it getting lost in the shuffle.  On the second time around, if the bank loses your paper work, they will consider the loan back in default and not extend the loan modification (trial or permanent) again. Do you see where I’m going with this? Under 5% of the trial modifications turn into a long term solution.  

Our loan modification attorneys use the best technology available to help our clients through the maze of loan modification.  I have contacted numerous loan servicers to discuss an automated underwriting system. I even met with industry executives at a loan modification conference in Dallas, TX to discuss the issues in person.  After the conference, I concluded that most of the loan servicers and banks are truly more interested in the bottom line & most homeowners are looked at as a risk or return and nothing more.  The only way to move forward efficiently is to implement the technology that has driven our country to the forefront of the world.  I use organization and automation everyday to keep my firm organized. If the loan servicers would do the same, we could fix this mess sooner rather than later.

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Reader Comments

The automated uderwriting system will make the work easier and accurate. Looking forward for the implemetation of this technology.

Often times it seems that homeowners that don’t even qualify for a HAMP loan modification are still being placed into trial modifications so the lender can squeeze a couple of extra payments out of them :(

It’s pretty horrible that lenders will approve homeowners for trial mods when they do not even qualify, or kick them out of the trial mod right before their last payment on grounds of a bad NPV test..

I’ve spoken with friends and neighbors who went through the loan mod process with lenders and can tell you that its worth your time and money to have professionals work this problem. I personally used an attorney with a few rental homes that were going into default and that investment has paid off 10 fold. Make sure you know how the attorney or firm handles and organizes files.

Thank you so much for the post! It’s such a maze out there for struggling homeowners. I always encourage people to seek out the experts!

yes.i also agree with you.some people not understand trial loam modification and permanent loan modification.after them faced more problem.before get a loan we should understand about kind of loan.learn about loan more….
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Trial mods can be really tough as the lenders have different motivations for granting them. after a certain amount of trial payments, the “bad” loan becomes “good” again and could sold to another lender. Basically, they are just granting a trail mod so they can sell a bad loan to another lender. It has nothing to do with helping the homeowner.