I received a three month trial modification from my mortgage lender. Last payment to be made on June 1, 2011, with a ten day ...

Asked over 3 years ago - Prescott, AZ

grace period. This puts the last day to make the third payment at June 10th. Problem is the lender filed a NTS with the foreclosure date of June 2, 2011, obviously before the last day I can pay the third payment of the trial period. The modification agreement says they will not conduct a foreclosure if I abide by the terms of the agreement. And no other documentation is required from me.

Any ideas or concerns? Actions I need to take?

Steve

Attorney answers (4)

  1. Morgan Jay Seegmiller

    Contributor Level 13

    Answered . I have experience in loan modifications and can provide you with some questions you need answered.

    You need to determine if this Trial period plan was offered under the Home Affordable Modification Program (HAMP). If it was, then you are protected from foreclosure as long as you make your trial plan payments on time. Most trial plan payments do not include a grace period, but even if yours does, pay on or before the due date rather than during the grace period. This will ensure that the lender is required to follow the HAMP rules and postpone your foreclosure sale date while you are still being considered for a permanent modification.

    If your trial period plan is not under the HAMP system, you probably have no guarantee and they may sell your home.

    I have seen some transactions in the HAMP system where the lender improperly sells a home while the borrower is being considered for the modification and the bank later realized they messed up and rescinded the sale, giving the home back to the homeowner. But there is no guarantee once the home is sold and suing a bank after a bad sale is very expensive.

    This is a complicated area of law. If you definitely do not want to lose your home, you should probably find an attorney that works in Bankruptcy / Foreclosure / Loan Modification to track the trustee's and the bank's activities to ensure they do not unexpectedly sell your home.

    If the modification option does not work out, the last resort is a chapter 13 bankruptcy plan where you can keep your home and pay off the payments you missed over 3 to 5 years.

  2. John Dale Wiley

    Contributor Level 10

    Answered . The banks are foaming at the mouth to foreclose. Sometimes they use the trial modification as a method just to put you further behind. Find someone in Arizona who knows how to work the foreclosure system, and get to them early.

    We have handled Arizona cases successfully before.

  3. Theodore Lyons Araujo

    Pro

    Contributor Level 20

    Answered . Most mortgage modifications fail. Do not fall behind on your payments as the foreclosure process will not be stopped or delayed by the mortgage modification process. if you are also getting paperwork for the foreclosure but the bank is assuring you not to worry, RUN to a bankruptcy attorney or they may sell the house right from under you.

  4. Bernard James Conway

    Contributor Level 14

    Answered . You're in what is known as a dual track system where the bank is talking to you about loan modification on one hand and pursuing a foreclosure on the other. As the previous advice said, most modifications fail. They tend to put you farther behind and makes the forelclosure harder to fight.

    Get an experienced lawyer in AZ.

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