Can A HAMP Trial Loan Mod Payment Plan Hurt Your Credit And Leave You Worse Off?

Your lender puts you into a HAMP trial loan mod. You are thrilled. You begin to make monthly payments. Here are some questions to consider:

Is your lender holding the payments in escrow until a final decision is made or is the lender giving you credit for timely payments?

If the lender is not crediting your account and your 3 month trial turns into a 12 month trial (yes, it is happening), then will you be heavily in debt at the end if the lender denies your loan mod app? In other words, will you now have accumulated substantially more arrears than you started with because you will owe the difference between the regular payments and the reduced trial payments for the entire year?

Will your lender report you as 12 months delinquent (or more) under that scenario, even if you made every reduced trial payment on time?

If you were current or only a month or two behind when the trial started, if you are ultimately denied will you then be so far behind that you cannot catch up on the arrears without a forbearance agreement or Chapter 13 plan? In other words, will the trial mod make things worse?

Will you need an accounting from your lender before you can sign off on any final loan mod agreeent? In other words, how will you know if the lender’s figures are correct?

Here is an interesting resource that you may want to read about loan mods.