It has been reported that there are hundreds of thousands of struggling homeowners currently making lower payments during the required trial period and many of them are at risk of being turned down for permanent assistance.

The mortgage servicers processing these trial periods have until January 31st to review all the borrowers that have entered the Home Affordable Modification Program (HAMP), according to a Treasury Department guideline.Treasury Department did not give any details yet but they say they will issue the guidelines this week.

During the review stage to see if borrowers qualify for permanent assistance the servicer must make sure the borrower has sent in all required paperwork and also determine if the borrower has made the monthly trial payments on time. They say they will send a letter to the borrowers who have not turned in everything giving them thirty days to respond. Their main goal at this point is to try and clear up all the pending trial modifications and determine whether or not the borrower will be approved for permanent assistance.

Many of the homeowners that are stuck in the trial period have been in it for 7 or 8 months waiting on an answer for their case.

According to Richard Neiman, superintendent of the New York Banking department, there are about 450,000 borrowers that are currently going through the trial period who have made payments on time and are showing the ability they can afford the payments they have been given. But he goes to say that unfortunately the same borrowers who are showing the ability to pay are also now at risk of foreclosure because of documentation issues.

The documentation issue has proven to be a major problem for Obama’s foreclosure prevention program. Thousands of borrowers are complaining that the servicer continues to lose paperwork and is very unorganized, while the mortgage servicers at the same time are arguing that it is the homeowner that is failing to provide the required documentation.

The Treasury Department is well aware of these issues and they say they plan to give mortgage servicers new plans this week to help expedite the process of turning trial periods into permanent modifications. They also came to say that the required documentation may lighten up as well.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.