March 24, 2015
The FHA and HUD have announced details about a trial payment plan for qualified borrowers who are in trouble on FHA home loans. The FHA mortgagee letter 2015-07, “Trial Payment Plans Associated with HUD’s Loss Mitigation Loan Modification Options for Forward Mortgages” informs lenders of certain details of the program and the conditions where the FHA views a trial payment plan (TPP) as a failure.
According to the mortgagee letter, “The Trial Payment Plan Agreement is a written agreement to be executed by
all parties on the original note, all parties on the FHA-insured mortgage, and
all parties that will be subject to the modified mortgage and/or partial claim,
except where:
–a borrower or co-borrower is deceased;
–a borrower and a co-borrower are divorced or legally separated; or
–a borrower or co-borrower on the original note and mortgage has been released from liability in connection with an assumption performed in accordance with HUD’s requirements.”
For borrowers at risk of what the FHA terms “imminent default”, the minimum trial payment period is four months. All other TPPs are for a period of three months, minimum.
According to the mortgagee letter:
“When a borrower uses a non-borrower household member’s income in qualifying for a loss mitigation home retention option and that non-borrower household member will also be included on the modified note, FHA-insured mortgage and/or partial claim, the non-borrower household member must sign
the TPP Agreement.
The mortgagee may evaluate a borrower on a case-by-case basis and provide an exception to the above TPP signature requirements when a borrower is unable to sign a TPP Agreement due to the borrower’s physical disability, mental condition or military deployment.”
Many borrowers who may be experiencing difficulty paying an FHA loan may wonder if they qualify for an FHA TPP–contact your loan officer and the FHA at 1-800 CALL FHA to learn more about this program, who it is intended for, and how to apply. It’s crucial that borrowers who are at risk of missing payments on their FHA home loans contact the lender as soon as possible to make arrangements and avoid going into loan default.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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