Caraballo & Associates

Ok, so last time I wrote about this I was left a little confused. I was not given clear information, everyone I spoke to gave me a different answer to the same question, etc. etc.

(Remember that I am sharing the story while at the same time what you see in italics and bold is me talking to you about my thoughts or giving you the reasons why something happened)

Well, I am now updating you on the next round of things that happened and I am still a little confused but not as much or maybe more, I haven’t decided yet…moving on. We are picking up from where we left off in part 1. If you have not read it yet you can find it here.

After many calls and having small, insignificant conversations with bank reps. I finally received a call from someone that said they were there to walk me through the complete process and tell me all the steps I needed to take and explain to me how the process worked in detail. This particular conversation took over 45 minutes.

The bank rep began by verifying all our personal information over the phone. 

Note: I did not GIVE any information in order to verify that this was actually a person from the bank.

She explained to me that I would begin in a “trial period” for the modification because the process of either accepting or denying my modification took about 90 days.

My first question was: will this trial period affect my credit? Since I was not late on any payments and my credit was still intact.

She mentioned that YES they would change the reporting to the credit bureaus to reflect that we were in a payment arrangement with them. Not a late payment but a payment arrangement.

FYI: both ways of reporting, payment arrangement or late pays are going to affect your credit. Albeit, payment arrangement seems to affect your credit less. If you are truly a candidate for a modification with a real hardship, this should not be a primary concern, I am mentioning it here in the interest of full disclosure.

My trial period was going to be 3 months with a substantial drop in my monthly payment. Which is nice, but since I am trying to see things from all angles I asked, “what happens to the money that is not being paid?”

What I meant by that was that if I was paying $1000.00/month in mortgage payments and they put me in a trial period paying $500.00. What happens to the $500 dollars that I am not paying? Do they just disappear? Does that bank take the hit? Does the government?

The rep told me that the money that was not being paid now would accrue and be factored into the final numbers when a decision is made on my modification.

This means that if I am not paying $500/month for three months and I owed $100,000 and they either do or don’t accept my modification, those $1500 would be added to my loan balance at that time.

Sounds like a scam but looking at it from both angles I guess the important part here is that it allows us some time to catch a breather with our monthly cash-flow and on the other hand it allows the bank to collect a little more money while they decide whether or not to accept the modification.

So the lessons for today are:

• The trial period WILL affect your credit.

If you are truly in trouble you should not be worried about your credit since it can be remedied within a short period of time.

• Do NOT share your personal information with anyone that says they are calling from the bank.

They should not be asking you for your personal information. It’s your mortgage lender for Pete’s sake! They should have all your information and if they don’t HANG UP and call them yourself in order to make sure you are speaking to who you want to speak to and not some fraudulent company trying to steal your identity or something

• The money you are not paying throughout the trial period WILL be added back in to the loan when a final decision is made.
  

I am trying to keep these posts somewhat small in size because there is so much detail that goes into this process that if I add all the information in one post it would take hours to read. So I am stopping right here for now. I will be back with more insider information on what happened next.

Let me know if this information is helpful to you. Feel free to send it to someone you think may benefit from it or share it on twitter, facebook, etc.

Thanks and hope to speak to you soon!

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• Should I Accept My Loan Modification…Part 5
• Should I Accept My Loan Modification…Part 4
• Should I Accept My Loan Modification…Part 3