Your woes do not end with delinquency.  You now need to get better at your paper work too, if you want to avail the administration’s mortgage modification program.  With effect from June 1, New Treasury Department guidelines require loan servicers to verify applicants' income and financial hardship before placing them into trial modifications. This will make it much tougher to get temporary relief from unaffordable mortgage payments. But if you make it into a trial modification, you're more likely to get long-term assistance, providing you send in your check on time.  Of the 1.2 million people who've started trial modifications, fewer than 300,000 have received permanent assistance. Another 278,000 have washed out of the program either because they didn't send in timely payments, hand in the required documents or meet the eligibility criteria.

 

Paperwork has caused all sorts of problems for the president's signature foreclosure rescue program. In order to get the effort off the ground quickly, administration officials allowed servicers to place people in trial modifications before verifying that they were indeed eligible for the program.  Many homeowners have been stuck in trial modifications for months and months while they wrestle with servicers over the documentation requirements. The financial institutions say that borrowers aren't sending in the needed forms; homeowners contend the servicers are losing them.  Many loans didn't require much documentation when they were originated, which makes gathering the paperwork during the modification process that much more difficult, said Paul Koches, executive vice president at Ocwen.  The pace of people entering trial modifications has already slowed as servicers have started requiring the paperwork in advance. Only 47,160 trials were started in April, down from more tha n 72,000 in February.  Among the documents Chase and other servicers require are hardship affidavits, two recent pay stubs, a bank statement, a tax return, proof of occupancy and a 4506T-EZ form.