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If you want to shed your mortgage burden, then you may go for a trial loan modification for that purpose. This will help you to navigate through your actual mortgage relief process efficiently.
However, before you start off with that, you need to know one or two basic things about the so-called trial period.
Do you really have to go through a trial modification period?
If you’ve applied for the government loan modification program, then you’ll definitely have to go through that. As per the Fannie Mae guidelines, you are required to undergo a 3-months trial period, if you’ve already defaulted on your loan before it actually starts. Alternatively, the same trial period will be of 4-months duration, if you believe that you are about to default on your loan.
However, in case of Freddie Mac, the trial period is of 3-months duration only. Moreover, if your mortgage loan modification isn’t a government one, then also you may have to oblige with a trial run.
What’s the need for the trial period?
This trial period has been executed with the intention to examine the commitment of the struggling homeowners like you. So, if you fail to complete the required trial period properly, then it is very likely that all your efforts to get your loan modified will go in vain.
Additionally, during this period your lender will get to know whether or not you can keep up with the modified loan repayment terms since the loan servicer won't be interested to work with you, if even after helping you with a loan modification, your financial condition doesn’t improve.
Does a trial period put a stop on all foreclosure proceedings?
Usually, loan servicer will not carry on with the foreclosure proceedings when they find you to be undergoing a trial period. However, that may resume with that if you do not complete the same. Here, in this case the state laws will remain binding on both the parties.
It may dictate whether or not to delay the foreclosure proceedings during the trial period and how fast that process will be resumed should you fail to complete it.
What are the requirements of a trial period barring loan payments?
In this case, your monthly loan repayment is the single most important factor. However, you may have to oblige with other requests as well. Say for example, you may be asked to submit copies of your homeowners insurance and various other documents during the trial period. Moreover, you’ll have to sign a loan modification agreement too.
Will the loan modification terms change during the trial period?
Essentially, loan modification terms may change, but that will happen, only if the loan servicer finds out major discrepancies in your claims about your financial hardship and that of your documents. However, situation of these sorts are generally averted since most of the loan services will review all the documents submitted by you before starting off with the trial period.
Your can keep your house purchased with an FHA loan and then rent it out and again borrow another FHA mortgage for a new house. But a borrower is only permitted to do this in certain circumstances if he is required to relocate far from a commuting distance for a new job or existing job.
Now the primary residence of the borrower of new FHA loan is the new house. But the situations under which this loan application is approved are limited as per the FHA rules.
You can take out a new FHA loan if the principal residence is evacuated in favor of another principal residence but this is not valid on existing rental properties revealed on the application that has been verified by tax returns as per as the Schedule E of form 1040. The mortgage on the evacuated property has been covered by FHA then you can qualify for a second FHA insured mortgage after undergoing an exemptions described in handbook HUD-4155.1.
Therefore, FHA loans are appropriate for private buyers but will not be a good idea to use for business purpose for purchasing and renting properties.
A homeowner can apply for a loan on a new house and can give the first house on rent only if an individual has a FHA loan with a loan-to-value ratio less than 75%.
You can qualify for a FHA loan after your rental property and income has been evaluated properly. You need to check the other FHA rules to understand what a borrower should do if he rents out a house and buy a new home. Make sure that your net rental income should be equal or more than the projected monthly mortgage payment.
The rules on the multi-unit property rental might vary depending on the situation of the borrower. Therefore, the FHA expect the borrowers to keep their rental units self sufficient.
Stories of homeowners who feel mistreated by their banks are commonplace these days. Hundreds of thousands of people are underwater and behind on their mortgages. As they seek loan modifications or other solutions, they tell of hours on hold, never speaking to the same person twice, reams of lost paperwork and rejections for reasons they don't understand.
Huffington Post blogger and accidental activist, Richard Zombeck founded ShametheBanks.org after watching as nearly all homeowners who told their story publicly managed to cause enough of a stir to shame the banks into helping these particular people, so in the spirit of publicly scorning the banks he started this site. You can read more about the launch at HuffPost.
Zombeck is in his own fight with his servicer and has been battling them for two years now ... there's no end in sight.
The information and tools you need to get through the storm…
Setting aside how to fix, or rather un-thaw the credit markets that would thereby make mortgages more readily available to more people, lets talk about getting your loan modified… homeowners need to start down this path by running what is called a “REST Report”.
I’ve written about the reasons for homeowners to use the REST Report when applying to their servicer for a loan modification, but I want to be much clearer and stronger in my statements in support of homeowners and lawyers using the REST Report…