Stop Foreclosure - The Trial Modification Period, Permanent Modification and Financial Counseling

You desire to stop the foreclosure on your home. You have applied for a modification to your mortgage under the Making Home Affordable Home Modification Program. Your mortgage company has determined that you qualify to have your monthly mortgage payment reduced to 31% of your income.

Let's take a closer look at some of the things that will happen from here on.

First there is a trial modification period. This lasts 90 days. You will make your new lower monthly payment for 3 months. You have to make each payment on time.

If you are unable to make the three payments on time, you are not eligible to continue in the program. You revert back to the status before you sought to be included in this program. You may be eligible for other options to prevent foreclosure on your home that your mortgage company has. This is not desirable. Those options are probably not going to be as favorable as a modification under this program.

If you make the three payments on time, your mortgage company will offer to make your modification permanent. At this point you will sign an agreement with them legalizing the modification. This modification takes effect on the first day of the month following the date on which the agreement is signed.

Your mortgage company is required to set up an escrow account for your real estate taxes and home owner's insurance. Your monthly payment will include 1/12 of your estimated annual real estate taxes and insurance premium. They will pay your real estate taxes and the premium for your home owners insurance for you from that point forward.

Your mortgage company will encourage you to participate in a counseling program with a housing counselor approved by the Department of Housing and Urban Development. They will also furnish you with a list of approved counselors in your area.

You can make an appointment with the counselor of your choice. That counselor will review your finances with you. They will help you understand all of your financial options. They will also work with you to create a workable budget.

Your monthly debt consists of your monthly mortgage payment, the payment due on a second mortgage if you have one and the payments due on your car and credit cards. If you are divorced and have alimony, child support or maintenance payments, these are added to your monthly debt. If the total of everything is equal to or greater than 55% of your gross monthly income, you will be required to participate in this counseling. If you don't, you will not be eligible to have your mortgage modified under this program.

You may be wondering what this modification program will cost you. You will not have to pay any fees associated with this modification. There are no charges for you. You also will not have to pay any late fees which you may have incurred prior to the start of the trial modification period.